Bank of Japan Must Be Ready to Issue Digital Currency, Says Exec
The deputy governor of the Bank of Japan has said the institution must be ready to issue a CBDC should public demand surge in response to technical developments.
The deputy governor of the Bank of Japan has said the institution must be ready to issue a central bank digital currency (CBDC) should public demand surge in response to technical developments.
In a strong statement of a future-oriented vision for the bank, Masayoshi Amamiya told attendees at a seminar — as per a Reuters report on Jan. 30 — that:
“The speed of technical innovation is very fast. Depending on how things unfold in the world of settlement systems, public demand for CBDCs could soar in Japan. We must be prepared to respond if that happens.”
BOJ: no imminent CBDC plans as of now
Unlike a private, decentralized cryptocurrency such as Bitcoin (BTC), a CBDC is a digital currency issued by a central bank, which has the status of legal tender and other properties of centralized, fiat money.
While Amoyashi did not envision the issuance of CBDCs significantly impacting the effectiveness of monetary policy and its effect on interest rates, asset prices and bank lending, he did identify technical innovations within settlement systems as an area worthy of close monitoring:
“The transmission mechanism [...] could become more complicated and difficult (to break down) if settlement systems change.”
The deputy governor also acknowledged academic research into the usefulness of CBDCs for sustaining negative interest rate policies — a feature of Japan’s monetary policy for years, well ahead of recent European development — and said this aspect was something “worth looking into.”
Nonetheless, as of now the BOJ ostensibly has no imminent plans to issue a digital currency, as it continues to evaluate potentially overlooked implications for monetary policy, as well as security factors.
A global perspective at the start of 2020
This month, the World Economic Forum (WEF) — in cooperation with some of the world's major central banks — unveiled a CBDC policymaker toolkit, with guidance for thinking through and designing three possible variations of CBDC: retail, wholesale and hybrid.
In the United States, the former chairman of the Commodity Futures Trading Commission, J. Christopher Giancarlo has recently confirmed that a Digital Dollar project and Foundation has now been formed to closely study prospects for converting the dollar into a “fully electronic currency based on blockchain.”
Both the foundation and Digital Dollar project are supported by global consulting giant Accenture PLC, which has been affiliated with Sweden’s central bank’s own initiative for a digital currency, the e-krona.
Recently, reports have circulated that Hong Kong and Thailand’s central banks have moved closer towards implementing a joint CBDC for cross-border payments.