Professor Jong-seop Lee on Stablecoins: "The New Currency Infrastructure We Must Lead"

# Stablecoins vs. CBDCs: A Crossroads in the War for Digital Money The debate over digital currency infrastructure is intensifying, with stablecoins and Central Bank Digital Currencies (CBDCs) carving out distinct paths. "Stablecoins enable an open monetary system similar to the internet, while CBDCs function under a centrally controlled framework, akin to an intranet," stated Lee Jong-seop, a professor at Seoul National University, during the "Stablecoin's Counterattack: Redesigning the Financial Order" conference on October 23 in Yeouido, Seoul. Professor Lee highlighted that the key differentiation between the two lies not only in technology but also in the overarching control structures, monetary policy repercussions, and sovereignty over financial governance. "We are at a critical juncture with these two systems diverging significantly," he observed. # Structural Divergence: Transparency vs. Centralization The fundamental distinctions between stablecoins and CBDCs originate from their technological frameworks. Professor Lee explained, "Stablecoins are built on public blockchain networks, making them open, transparent, and accessible to all. In contrast, CBDCs operate under a closed, permission-based system fully governed by central banks, limiting access to verified entities." To clarify this divergence, he compared the two systems to common digital networks. "CBDCs resemble a country-specific VPN-based digital currency, akin to an intranet. Stablecoins, however, possess the cross-border functionality of the internet, allowing anyone, anywhere, to transact freely," he said. These architectural differences are intrinsically linked to discussions of financial openness, control dynamics, and national monetary sovereignty. # Stablecoins: Transforming Finance in Unstable Economies Professor Lee pointed out the growing adoption of stablecoins as a real-world reflection of these structural variances. Public blockchain-based stablecoins are gaining traction worldwide, especially in nations with fragile financial systems. "Take Argentina as an example. With rampant inflation and distrust in its national currency, U.S. dollar-backed stablecoins have quickly become a common payment method. Similarly, in parts of Africa, individuals are using stablecoins via smartphones without traditional bank accounts," he stated. This trend extends beyond convenience, marking a shift in infrastructure that bypasses traditional financial systems. "This shift opens new avenues for financial accessibility, potentially undermining existing monetary sovereignty frameworks," Professor Lee cautioned. # The Role of Private Companies: A New Monetary Infrastructure A notable aspect of stablecoin proliferation is the involvement of private companies in their issuance. Corporations like Tether(USDT) and Circle(USDC) dominate the stablecoin market, accounting for over 80% of the total supply. "Effectively, these firms are creating new distribution channels for the U.S. dollar. Stablecoins are no longer just digital assets—they're forming a globally integrated currency infrastructure," Professor Lee noted. He added that this trend could increasingly influence the traditional international financial order. # Domestic Implications: Korea’s Strategic Response Professor Lee emphasized that the rise of stablecoins has both global and domestic repercussions for financial ecosystems. As stablecoin usage expands, it could impact foundational financial functions, including monetary policy, demand for the Korean won, and currency stability. "If Korean users process overseas payments using stablecoins, there will be less need to convert won or rely on domestic card networks. This shift could reduce demand for the won over time and exert pressure on foreign exchange market stability," he warned. Lee advocated for a proactive and multifaceted digital currency strategy in Korea. Beyond ensuring the stability of a potential CBDC, he suggested leveraging stablecoins to expand globally. "For instance, if Korea’s intangible assets, such as K-content or software, become widely popular abroad and are transacted using won-backed stablecoins, it could boost foreign demand for the won," he explained. "Korea, a hub for exports and intellectual property-based businesses, cannot afford to be sidelined in the digital currency competition," he concluded. He urged for balanced policymaking, stating, "The discourse on digital currencies boils down to the question of 'who controls money and how.' CBDCs and stablecoins should be seen not as rivals but as complementary systems that need a harmonious and well-calibrated approach." As the global financial system continues to evolve, the path nations choose between open and controlled networks will reverberate far beyond monetary policy—reshaping economies, governance frameworks, and global financial power dynamics.