Bank of Japan: Adopting Central Bank Crypto Would Mean Dropping Cash

A Bank of Japan official has ruled out the launch of a central bank digital currency because to do so may require the country to abandon cash.

AccessTimeIconJul 5, 2019 at 9:00 a.m. UTC
Updated Sep 13, 2021 at 9:23 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

An official at the Bank of Japan (BoJ) has ruled out the use of central bank digital currencies because to do so may require the country to abandon cash.

According to a report by Reuters, Masayoshi Amamiya, deputy governor of the Japanese central bank, on Friday cast shade on the notion that central banks could make negative interest rate policies more effective by issuing their own digital currencies (CBDCs).

The issue comes down to the fact that, if the BoJ issues a digital yen and set a negative interest rate, individuals and businesses would effectively be charged for holding the CBDC. As a result, he argued, holders would drop the digital coin and instead hold cash.

Amamiya concluded:

“To overcome the nominal zero lower bound, central banks would need to eliminate cash. Eliminating cash would make settlement infrastructure inconvenient for the public, so no central bank would do this.”

Back in April 2018, Amamiya also said the BoJ had no plans to issue a CBDC directly for consumers because it could undermine the existing two-tiered system and affect financial stability.

Currently central banks only give access to limited entities such as private banks, which face consumers directly in a second tier. Launching a digital currency backed by the central bank would change the system without proving to be financially stable, he argued.

Japanese yen image via Shutterstock

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.