Chang Yong Rhee 'Angry' Over the Halt of 'Project Han River'…"This Is Not a CBDC" [Jin Kyu Kang's BOK Watch]

Regarding the suspension of 'Project Han River,' which was a real transaction test of deposit tokens conducted jointly by the Bank of Korea and commercial banks, Chang Yong Rhee, Governor of the Bank of Korea, commented that he was "angry." He stated, "Rather than suspended, postponed, or abandoned, it is a temporary halt," adding, "There are many misunderstandings about the project."

After the Monetary Policy Committee meeting on the 10th, Governor Rhee explained this during a press conference held at the Bank of Korea's annex in Namdaemun-ro, Seoul, when asked about 'Project Han River.' He emphasized, "First of all, Project Han River is not a CBDC (Central Bank Digital Currency) project."

In this experiment, deposit tokens were used. They are not created based on the central bank's issuing power but rather digitized versions of individuals' deposits. Governor Rhee said, "Project Han River was about safely introducing a Korean won-based stablecoin," and "We have never planned a retail CBDC from the beginning."

Regarding the temporary suspension, he said, "The pilot project was expected to go through phases 1 and 2, followed by commercialization in phase 3," and "At the conclusion of phase 1, as discussions about non-bank-issued stablecoins spread, doubts grew as to whether a system centered on the Bank of Korea would be implemented in reality." He added, "Since the Bank of Korea is not an institution with legal, regulatory, or supervisory authority, there must have been considerable apprehension about following the Bank of Korea's lead."

Responding to criticism that "the Bank of Korea bore no costs," he stated, "The Bank of Korea also invested about ₩17 billion," and "I understand that banks, on average, each paid about ₩4 billion." He further added, "The lack of a roadmap was not a reason for the suspension either."

On the same day, Governor Rhee reiterated his position that he agrees on the necessity of a Korean won-based stablecoin, but that it should be introduced gradually and centered around the banking sector. He said, "Stablecoins are necessary in terms of enabling programmable transactions," but also noted, "The issue is how they are to be introduced." He pointed out, "If issuance by non-banks is allowed, a number of private currencies will be created," and "It could repeat the confusion from the 19th century, when private banks issued currencies freely."

He also mentioned that this conflicts with the issue of foreign exchange liberalization: "If a Korean won-based stablecoin comes out, the pace of foreign exchange liberalization will intensify," and "While it could benefit the financial industry, it is important to consider that it could impact the entire national economy."

Reporter Jin Kyu Kang josep@hankyung.com