Bank of Korea Governor Shin Hyun-song and European Central Bank Executive Board member Isabel Schnabel held a policy dialogue on June 1 at the BOK annex in Namdaemun-ro, Jung-gu, Seoul, addressing blockchain-based tokenization and non-dollar stablecoins. The discussion occurred during the 2026 BOK Conference, a two-day event running June 1-2 under the theme 'Central Banks and the Future of Money,' attended by scholars, international organizations, and central bank policymakers worldwide. Schnabel emphasized that central bank money must continue serving as an anchor in tokenized financial systems and that appropriate regulation is essential to balance innovation with risk mitigation.
BOK and ECB Discuss Tokenization Infrastructure Projects
Shin asked Schnabel about the ECB's approach to Pontes and Appia projects, stating that BOK is internally discussing whether to use real-time gross settlement (RTGS) or place central bank money directly on tokenized platforms for Project Hangang. Pontes and Appia are distributed ledger technology (DLT)-based infrastructure projects the ECB is pursuing to respond to tokenized financial markets and digital payment ecosystems. Pontes aims to improve Europe's wholesale and cross-border payment infrastructure, while Appia focuses on placing central bank money and collateral services on DLT. Project Hangang is a domestic pilot project to develop payment infrastructure centered on central bank digital currency (CBDC) and deposit tokens.
Schnabel explained that Pontes addresses existing problems with quick implementation, while Appia is a long-term structural project. She stated that while the ECB does not know what the future monetary ecosystem should look like, it is clear that central bank money must continue to serve as an anchor even in a tokenized world.
Schnabel Outlines Central Bank Money Role in Tokenized Systems
Schnabel stated that private assets cannot fulfill the anchor role and that tokenized financial systems will replicate existing financial systems. She added that central bank money will serve as a safe settlement asset in a two-tier monetary system. She emphasized that in a tokenized world, the fundamental structure will mirror traditional finance, with central bank money maintaining its position as the foundational settlement layer.
Officials Address Stablecoin Growth and Regulatory Framework
Shin asked why non-dollar stablecoins have not achieved substantial growth, noting that euro stablecoins represent only 0.3% globally. He added that domestic interest in won-denominated stablecoins is very high and requested advice on adding them to the monetary ecosystem.
Schnabel cited network effects as a primary factor, explaining that network effects mean the value of a product or service increases as more users adopt it, making first-mover advantage significant for stablecoins. She highlighted the necessity of regulation, noting that the Markets in Crypto-Assets (MiCA) framework requires stablecoin issuers to hold significant bank deposit reserves, which may offer lower returns compared to holding government bonds. Schnabel stated that regulation will ultimately be a key driver and that a system providing appropriate guardrails is needed to promote innovation while addressing potential side effects.
FAQ
What did BOK Governor Shin and ECB's Schnabel discuss on June 1?
Shin Hyun-song and Isabel Schnabel held a policy dialogue on June 1 at the BOK annex in Seoul, discussing blockchain-based tokenization infrastructure projects including Project Hangang, Pontes, and Appia, as well as stablecoin regulation and the role of central bank money in tokenized financial systems.
Why did Schnabel say central bank money must remain an anchor in tokenized systems?
Schnabel stated that private assets cannot fulfill the anchor role and that tokenized financial systems will replicate existing financial systems, with central bank money serving as a safe settlement asset in a two-tier monetary system, maintaining its foundational position even as tokenization advances.
What regulatory challenge did Schnabel identify for stablecoin growth?
Schnabel noted that MiCA requires stablecoin issuers to hold significant bank deposit reserves, which may offer lower returns compared to government bonds, and emphasized that regulation will be a key driver requiring appropriate guardrails to promote innovation while addressing potential risks.
