Bank of Japan Deputy Governor Masayoshi Amamiya reiterated that the Bank of Japan currently has no plans to issue a digital currency. The remarks were made during a lecture entitled “The Future of Money” at a Japan Society of Monetary Economics event held in Nagoya on October 20, and circulated by some media outlets.
In response to an academic opinion at the Society that the central bank should issue its own digital currency in lieu of bank notes with the advantage of financial stability that can overcome the zero lower bound, Mr. Amamiya presented the example that if financial system experiences stress, the likelihood of a fund shift from deposits into central bank digital currency “could have an impact on the bank’s ability to provide funding to the economy” due to a reduction in banks’ financial intermediation. He indicated the Bank of Japan “would need to look into many aspects, such as whether digital currency would actually contribute to improvements in the effectiveness of financial policies or financial stability.”
Furthermore, he noted that the introduction of central bank digital currency to the current two-tier financial system between the central bank and private banks would turn it into a one-tier system and “may have an impact on the utilization of information and data by private entities for payment settlements.” He is reported to have stated that “it is highly likely we will retain the two-tier structure going forward.”
In addition, Mr. Amamiya pointed out that there are “tremendous hurdles in popularizing (cryptocurrencies) as a method of payment” in regards to cryptocurrencies such as Bitcoin (BTC). However, he considers the blockchain technologies that form the basis of cryptocurrencies as “promising,” expressing the view that “(blockchains) have the potential to realize better efficiency in transactions and payments.” Mr. Amamiya delivered remarks at a FinTech conference jointly held by the Bank of Japan and institutions such as the International Monetary Fund (IMF) and Financial Services Agency in April this year, where he also expressed that the bank has no plans to issue digital currencies. On the other hand, he revealed his belief that the utilization of new technology could influence the financial stability and payment methods and that particular technology will be explored from the perspective of improving economic social infrastructure.
*This article was written by Fisco