Bank of Korea Governor Shin Hyun-song will lead an international body that sets standards for the global payments market and for stablecoins.
The central bank said on the 10th that Shin has been appointed chairman of the Committee on Payments and Market Infrastructures (CPMI) at the Bank for International Settlements (BIS). His three-year term began on the 1st of this month. The CPMI operates under the BIS, often called the central bank for central banks, and oversees interbank fund transfers and clearing and settlement infrastructure worldwide. More recently it has also taken on the task of setting international standards in areas such as stablecoins. With 28 central banks participating, including the U.S. Federal Reserve and the European Central Bank, the committee is comparable in stature to the Basel Committee on Banking Supervision (BCBS). It is the first time an Asian has been named to the chairmanship, a post previously held by heads of U.S. and European central banks.
Shin's appointment is significant in that it marks South Korea beginning to assert its voice in shaping a global market order long dominated by the United States and Europe. The CPMI chairmanship has mostly gone to senior U.S. and European central bank officials, among them former New York Federal Reserve President Timothy Geithner, who later served as U.S. Treasury secretary.
As the expulsion of Iranian banks from SWIFT, the international financial messaging network operated by the Society for Worldwide Interbank Financial Telecommunication, demonstrated, global payment and settlement networks are core infrastructure of the international financial order and determine how effective financial sanctions can be.
The international standards drawn up at the CPMI are reflected in the regulation and supervision carried out by financial authorities in major countries. Although it is an international body, its influence is correspondingly large. A leading example is the Principles for Financial Market Infrastructures (PFMI), established jointly with the International Organization of Securities Commissions (IOSCO) in 2012. The 24 principles that financial market infrastructures must observe are reflected in domestic rules as well, including the oversight of payment and settlement systems under Article 81 of the Bank of Korea Act.
Joint international oversight of SWIFT and of Continuous Linked Settlement (CLS) is another of the CPMI's main duties. SWIFT is the international financial messaging network through which banks exchange cross-border remittance information, and it has also served as a channel for financial sanctions, as in the exclusion of Iranian and Russian banks. Who leads the setting of oversight standards for payment networks that determine the effectiveness of international financial sanctions is directly tied to financial hegemony. That is the backdrop to the competition between the United States and Europe over the CPMI chairmanship. The CPMI does not directly control SWIFT but coordinates a joint oversight framework among central banks. CLS is a system that settles both currencies in a foreign exchange trade simultaneously, eliminating the risk that only one side pays, and the won has been used as a settlement currency there since 2004.
Stablecoins and tokenized assets are also expected to be major items on the agenda. The CPMI does not directly regulate stablecoin issuers or set unified rules for them, but it is examining questions such as whether the existing PFMI standards could apply if stablecoins become established as payment infrastructure. With the U.S. GENIUS Act and Europe's Markets in Crypto-Assets Regulation (MiCA) establishing different regulatory frameworks, discussions on common international standards are expected to continue.
The CPMI is also expected to address improvements to cross-border payments, digital financial innovation and artificial intelligence-based payments. "Korea has pioneering experience in payments and settlement, including the Han River Project, the first real-transaction test conducted by a central bank," a Bank of Korea official said. "Expectations are high because this is an opportunity to establish Korean cases in the field of international standard-setting."
Original reporting by Kim Hye-ran for Seoul Economic Daily.
AI-translated from Korean. Quotes from foreign sources are based on Korean-language reports and may not reflect exact original wording.
Watch · Seoul Economic Daily
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