Shin Hyun-song Says CBDCs Can Do What Crypto Does, Backing BOK’s Project Hangang

Longtime BIS Skepticism on Crypto

Princeton Webinar Focused on CBDCs’ Role

‘No Need to Reinvent Central Bank Money’

‘Stablecoins Resemble 19th-Century Private Money’

BOK CBDC Trials to Gain Momentum After He Takes Office

Shin Hyun-song, the nominee to become governor of the Bank of Korea, said in 2022 that anything cryptocurrencies can do can also be done by a central bank digital currency, or CBDC. Shin has consistently expressed skepticism about cryptocurrencies since his time at the Bank for International Settlements. His remarks are adding momentum to expectations that the BOK’s CBDC pilot, Project Hangang, will move ahead.

According to industry officials on April 1, Shin made the remarks in June 2022 at Princeton University’s Bendheim Center for Finance. Speaking at “Markus’ Academy,” a webinar series founded by Princeton economics professor Markus Brunnermeier, he said CBDCs can do the same things cryptocurrencies can from a technological standpoint. The lecture was titled “After the Crypto Crash: The Role of Future CBDCs.”

Shin repeatedly emphasized the strengths of CBDCs in the lecture. “Everything rests on the safe foundation of central bank money,” he said. “Because the real thing — central bank money — already exists, there is no need to rely on stablecoins to create or reinvent central bank money.”

“If the real thing exists, why do we need stablecoins?” he asked. Centuries of experience show that commercial banks and nonbank payment service providers can function very effectively on the foundation of central bank money.

‘Crypto’s Virtuous Cycle Is Really a Speculative One’

Shin focused in particular on the network effects of central bank money. Network effects refer to the phenomenon in which the value and usefulness of a product or service rise exponentially as the number of users grows. “Money is the perfect example of network effects,” he said. “If cryptocurrencies were a suitable form of money, people would already have converged on a single cryptocurrency.”

With money, broader use should produce a virtuous cycle of wider acceptance. What appears to be a virtuous cycle in crypto, he said, is closer to the outward form of a speculative cycle than something rooted in money’s core nature as a coordination device.

He also cited privacy protection as an advantage of CBDCs. In a digital environment, users want to verify the provenance of funds to be sure the money is genuine, Shin said. Cryptocurrencies do that by publicly posting the full transaction history.

CBDCs, by contrast, can protect privacy even when real-name identities are used because the central bank manages transaction records. Zero-knowledge proof technology can also be used to verify the source of funds, he said. Zero-knowledge proofs, or ZKPs, allow holders to prove ownership of assets mathematically without exposing the underlying data.

‘Stablecoins to Remain a Supporting Tool at Best’

Shin has also taken a negative view of stablecoins pegged one-to-one to fiat currencies. In last year’s BIS annual report, “The Next-Generation Monetary and Financial System,” he argued that stablecoins fall short of serving as the core of the monetary system.

In the report, Shin wrote that stablecoins’ future role remains uncertain but would most likely, at best, be limited to a supporting function alongside existing money. He likened stablecoins to the private banknotes circulated during the US free-banking era of the 19th century. He said there is an inherent tension between the promise of redemption at par, the credit and liquidity risks involved, and the need for a profit-seeking business model.

Shin also argued that central banks should lead the digital transformation of the existing monetary system, a position similar to the BOK’s stance in recent discussions over won-denominated stablecoins. “The central bank, as steward of monetary and financial stability, should lead the transition,” he said. Such leadership is essential to realizing the full potential of tokenized systems in a safe, efficient and inclusive way. If society takes a detour through private digital money, it may end up relearning the historical lesson that unsound money carries social costs.

If Shin takes office, the BOK’s CBDC program, which was provisionally halted in the second half of 2025, appears set to resume in earnest. The central bank plans to push ahead with the second phase of Project Hangang in the first half of 2026. At the World Congress of the Econometric Society in Seoul in August 2025, Shin said Project Hangang should continue without interruption.

Hyun Jung-hwan, a professor of international trade at Dongguk University and a former BOK official, said Shin views stablecoins as lacking key attributes money should have, including stability and settlement finality. The CBDC project could pick up speed, he added, though Project Hangang remains in the testing stage and commercialization could still take years.

Separately, Shin reported to his confirmation-hearing office in Jung-gu, Seoul, for the first time on March 31. Barring any major surprises in the hearing process, he is set to take office as BOK governor on April 21.