Following the passage of the US GENIUS Act for stablecoins, Korean policymakers have identified the need for won-denominated stablecoins. Both major political parties recently tabled stablecoin bills. The Korea Capital Markets Institute has published a report on the potential for Korean stablecoins, highlighting the need for appropriate reserve assets. Korea doesn’t issue short term government bonds, which are needed to support a stablecoin market.
However, the central bank issues monetary stabilization bonds (MSBs) which have maturities of three months to three years. But the market for MSBs may not be large enough for stablecoins. Nor is it sufficiently liquid.
Currently government bonds range in term from two to fifty years. Approximately 45% of bond issuance has maturities of five years or less, while 30-year bonds comprise over 30% of total issuance. And the proportion of longer dated maturities is rising. This contrasts markedly with the United States, where issuance is dominated by Treasury Bills, although Bills make up a small proportion of total outstanding debt, because they are rolled over regularly. Two factors explain Korea’s bias towards longer dated issuance.
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