Min Byung-deok: "Claiming that stablecoins cause a spike in prices? ...It's nothing but a baseless rumor"

Min Byung-deok, a member of the Democratic Party of Korea, directly refuted the Bank of Korea's claim that the Korean won stablecoin could be a cause of rising prices.

On the 28th, Min Byung-deok stated on his Facebook page, "The Bank of Korea's concerns that the issuance of a Korean won stablecoin could sharply raise prices are nothing but a theoryless, rumor-level argument stemming from a lack of understanding of the concept of money supply and the structure of financial markets."

Min continued, "A stablecoin does not create new money. It is maintained in a 1:1 exchange format, so liquidity remains unchanged. Stablecoins are usually issued by depositing 100% collateral in cash or government bonds. This is simply a conversion of existing liquidity in the market into a digital token form," he explained.

He added that even if a new stablecoin emerges, it does not increase the amount of money in circulation. Min Byung-deok also stated, "Stablecoins are mainly collateralized with short-term government bonds with a maturity of three months. Government bonds are almost as safe as cash and are already actively used in the financial markets as repos (repurchase agreements), collateralized loans, etc. A stablecoin is simply a tokenization of government bonds in digital form."

He emphasized that the Korean won stablecoin is not a means of creating new money. Min said, "The Korean won stablecoin is a technical tool that converts existing liquidity into digital form. The Bank of Korea's 'price spike' hypothesis results from a lack of understanding of reserve structures, deposit multipliers, definitions of monetary indicators, and more. What policymakers need to do is have balanced discussions based on accurate theory and real-world conditions. Now is the time to focus on how to design financial infrastructure and monetary policy for the digital era, rather than on unnecessary fears of technology," he urged.