An official with Japan’s central bank has weighed in on the topic of national digital currencies, raising questions about the ripple effects that these instruments might create in a country’s financial system.
In a year full of buzz about the possible issuance[1] of central bank digital currencies (CBDCs), an official with the Bank of Japan (BOJ) has stated[2] that the institution will not introduce such a monetary instrument any time soon.
In prepared remarks delivered on April 16 at a conference attended by representatives of the International Monetary Fund[3] and Japan's Financial Services Agency[4], BOJ Deputy Governor Masayoshi Amamiya said that while the central bank "does not have a plan to issue its own digital currency at this juncture," it could be open to such a project "in the future."
Amamiya also used the platform to explore possible negative outcomes that central bankers might consider before issuing a CBDC.
In many countries, he explained, central and private banks have achieved a sort of equilibrium: Their relationships form the basis of a "two-tiered system" in which central banks supply a country's currency and the private banks operating there "perform the function of credit creation and … provide payment services to the general public," among other services. In Amamiya's estimation, the symbiotic relationship between these two types of institutions "reflects the wisdom of human beings in history to achieve both efficiency and stability in the currency system," and any action that threatens to unsettle this system should only be taken after great deliberation.
From the perspective of a central bank, he argued, issuing a CBDC would be akin to "allowing households and firms to directly have accounts in the central bank." Therefore, he worries that one possible effect of introducing
