Shin Hyunsong: "Korea's Real-World Tokenization Tests Are Two Years Ahead of Europe... Next Task Is Government Bond Tokenization" (Comprehensive)

Presentation at ECB Central Bank Session in Sintra, Portugal
Sharing South Korea's Digital Currency Experiment: The 'Han-Gang Project' Experience

"Money Is Evolving... Tokenization Based on Integrated Ledger Is the Future"
"Innovation Should Be Anchored in Trust in Central Bank Money"
"Stablecoins Can Coexist, but Have Limits as a Replacement for Future Money"

Shin Hyun-song, Governor of the Bank of Korea, expressed pride on the international stage, sharing South Korea's experience with the real-world testing of its central bank digital currency (CBDC), known as 'Project Han-Gang,' and stating, "We are two years ahead of Europe."

He emphasized that 'tokenization' is at the heart of the future of money and suggested that not only deposits but also assets such as government bonds should be tokenized. He repeatedly stressed that innovation in the future monetary system should be anchored in trust in central bank money, rather than in decentralized blockchains.

Shin Hyun-song, Governor of the Bank of Korea, is presenting at a session of the "European Central Bank (ECB) Central Banking Forum" held on the 1st in Sintra, Portugal. Provided by the European Central Bank (ECB). Photo by Sergio Garcia

Governor Shin made these remarks during his session presentation at the Central Bank Forum hosted by the European Central Bank (ECB) in Sintra, Portugal, on July 1 (local time).

This forum is an annual high-level policy dialogue hosted by the ECB, where central bank governors from major countries, academics, and market experts gather to discuss financial and economic issues. On this day, Governor Shin presented a paper on the topic of 'Tokenization of Money, Payments, and Financial Transactions,' sharing South Korea's experience with 'Project Han-Gang' and its implications.

Governor Shin described 'Project Han-Gang' as "a pioneering case that has implemented the next evolutionary stage of money, tokenization, not as an abstract idea but as a functioning system," and emphasized, "We have made this a reality two years ahead of 'Appia,' the blueprint that the ECB has set for 2028."

'Project Han-Gang' is a real-world test of digital currency led by the Bank of Korea. In this project, banks tokenize deposits using the CBDC issued by the Bank of Korea, and the feasibility of real-world transactions is verified. The first phase of testing was completed at the end of last year. In the second half of this year, the number of participating banks will be increased, and the scope will be expanded to include government fiscal execution, with a second round of testing to be conducted.

Governor Shin stated, "In the second phase, the number of participating banks will increase to nine, and additional features such as biometric authentication and automatic conversion between deposits and deposit tokens will be added for convenience. Most importantly, we plan to actively utilize this system for government fiscal execution, such as subsidies for building electric vehicle charging infrastructure and business operation expenses in the public sector."

Governor Shin also announced that the next stage for 'Project Han-Gang' would be the tokenization of assets, such as government bonds. He explained, "Government bonds are a prime example; if government bonds are issued and circulated within an integrated ledger, the exchange of bond ownership and funds can be processed simultaneously, and everything from real-time verification of collateral assets to maturity repayment can be automated." He added, "This will also support the core responsibilities of the central bank, namely monetary policy and financial stability."

He further stated, "We should also seek ways to connect the digital currency system with 'Project Agora,' in which eight central banks from the US, Europe and elsewhere, along with more than 40 financial institutions, participate to enable the exchange of tokenized currencies from various countries on a single platform. Through this, if foreign exchange and even securities settlement can be processed in a single transaction, it will reduce costs and further expand the international use of the Korean won."

Shin Hyun Song, Governor of the Bank of Korea, is conducting a Q&A session after his presentation at the 'European Central Bank (ECB) Central Bank Forum' held on June 1 in Sintra, Portugal. Provided by the European Central Bank (ECB). Photo by Sergio Garcia

Governor Shin once again emphasized that central banks should take the lead in designing the future monetary system. He said, "Now that money stands at the turning point of tokenization, the remaining challenge is how to create a 'new stage' where smarter money and assets can come together." He presented the 'integrated ledger,' with the central bank at its core, as the blueprint.

Governor Shin criticized that "decentralized blockchains, which anyone can participate in, must continuously reward validators, and the more strictly they are validated to enhance security, the higher the costs and fees become. Money is powerful when pooled together, but people will scatter in search of cheaper options, breaking up into isolated islands that are hard to connect."

He further emphasized, "Central bank money is the 'anchor of trust' that has supported the monetary system for a long time. By leveraging this trust, we can enjoy the benefits of tokenization while building a system that operates stably without expensive consensus competition."

He stated, "The Bank of Korea will lead the development of the future monetary system through thorough preparation and proactive innovation, working closely with the government."

Meanwhile, Governor Shin reiterated his negative stance on stablecoins based on blockchain, stating that they have limitations in replacing future money.

In the Q&A session following his presentation, he said, "Stablecoins issued by the private sector and deposit tokens centered on an integrated ledger can coexist, but they are fundamentally different solutions."

Governor Shin particularly emphasized, "The global stablecoin ecosystem as a whole amounts to about 300 billion dollars, and a significant portion is used mainly as a store of value, not for payments. It would be unrealistic to expect the entire global financial system to be supported and safely operated at this scale."

This content was produced with the assistance of AI translation services.