Bank of Japan denies plans on issuance of digital currency

Bank of Japan deputy governor says digital currency brings uncertainty to economic and financial system

  588
(Source: pixabay)

(Source: pixabay)

TAIPEI (Taiwan News) – Deputy Governor of the Bank of Japan (BOJ) Masayoshi Amamiya (雨宮正佳) said during a conference on Friday (June 5) that the BOJ would not issue digital currency in the near future, Reuters reports.

As cashless payments become more and more common, central banks around the globe are looking into the possibility of issuing central bank digital currencies (CBDC) as an alternative settlement method to bank notes.

Masayoshi denied that the BOJ has any plans to issue CBDC anytime soon, although he admitted that “the necessity [of issuing CBDC] is increasing rapidly.” He told Reuters that “it is important for central banks to have a deeper understanding in the latest technological advancement and the possibility to implement CBDC.”

The deputy governor agreed with a point raised during the conference that the issuance of CBDC could standardize the chaotic diversified cashless settlement market in Japan, making digital settlement more consumer-friendly. Nonetheless, he does not think CBDC is “the best option to promote competition,” especially when the market is still at “a preliminary stage where the competition and innovation of fintech companies are much needed," reported Reuters.

Responding to the argument that CBDC could make minus interest rate policies more efficient, Masayoshi said that “it would require a complete retirement of cash.” He made a counterargument that households and companies would simply choose to hold on to their cash, which, with its zero interest rate, is still better than a negative one, and that ultimately the policy would not mean much.

Last year, major central banks could not reach an agreement on how to govern cryptocurrencies, such as Facebook's Libra, and concluded that the scale of the cryptocurrencies market is still too small to pose a threat to the current financial settlement system, LTN reports. However, many central banks, such as the European Central Bank, are now more wary about how cryptocurrencies may impact the financial system and the role of central banks.