Bank of Korea Governor Highlights Stablecoin Challenges and Urgency for CBDCs

According to CoinDesk, Bank of Korea Governor Rhee Chang-yong expressed concerns about the growth of stablecoins such as tether (USDT) and USD Coin (USDC) during the Digital Money: Navigating a Changing Financial Landscape conference. He stated that despite their name, stablecoins often lack stability, posing challenges to central banks. Rhee emphasized the urgency for central banks to consider introducing central bank digital currencies (CBDC), whether retail or wholesale, as widespread adoption of stablecoins could diminish the role of central bank money and impair the effectiveness of monetary policies. The ability of stablecoins, cryptocurrencies whose value is linked to a fiat currency such as the dollar or euro, to hold their pegs has been brought into focus this week. On Wednesday, ratings company S&P introduced a system for evaluating that feature and rated tether, the largest stablecoin by market value, just one rank above the lowest in its five-point scale. None of the eight coins evaluated received top marks. Rhee also mentioned that the Bank of Korea is working on a wholesale CBDC pilot and exploring its use in the tokenization of real-world assets, as reported by Yonhap News. The bank has already announced plans for a retail pilot scheme involving 100,000 people next year.