South Korea Releases Won Internationalization Roadmap: Promoting Free Convertibility and 24/7 Trading, Simultaneously Developing Stablecoins and CBDC

BlockBeats News, July 19th - Today, the South Korean Ministry of Economy and Finance, together with the Financial Services Commission, the Bank of Korea, and the Financial Supervisory Service, officially announced the "Korean Won Internationalization Roadmap." The goal is to transition the Korean Won from a regulated currency to a "freely convertible currency," achieving a transaction environment free from time and location constraints. Key measures include: building an "Offshore Korean Won Payment Network" by the Bank of Korea on the basis of the already operational 24-hour foreign exchange market. Once overseas financial institutions are registered as offshore settlement institutions, foreigners can complete deposits, remittances, and payments without the need for a Korean bank account. Significant exemptions will be granted for Korean Won capital transactions among foreign investors. Foreign exchange controls will be significantly relaxed, with the threshold for reporting foreigner-held Korean Won loans and capital transactions doubled, moving towards a system of post-transaction reporting. Korean Won account procedures will be unified and simplified to enhance usability. In the digital finance field, the South Korean government will formulate rules for the issuance and circulation of a Korean Won stablecoin in accordance with the "Basic Act on Digital Assets." It will promote South Korean banks' practical projects on CBDC and tokenization of government bonds, and participate in the Agora project led by the Bank for International Settlements to seize the digital international settlement market.

Regarding supporting measures, the government will push for the inclusion of the MSCI Developed Countries Index, expand the collateral range for government bonds and stablecoin bonds, permit government bond borrowing and lending transactions between domestic and foreign investors within international central securities depositories, and enhance foreign investor access to securities. On the trade front, policy financial rate incentives and expanded trade insurance coverage will be provided to enterprises settling in Korean Won. A direct currency trading system will be expanded with major trading partners, promoting cross-border QR payment interoperability and the Asian multilateral payment network (Project Nexus) to establish a Korean Won settlement channel bypassing the U.S. dollar. A mechanism for overnight private sector Korean Won supply will be established, with government and central bank backing when necessary. Restrictions on foreign financial institutions' Korean Won financing will be simultaneously loosened, and the domestic bank custody business will be formalized. The government stated that the internationalization of the Korean Won will drive capital market development, reduce corporate FX hedging costs, and enhance foreign exchange market stability. However, it will also upgrade foreign exchange stability policies and macroprudential management systems to address volatility risks.