Japan Must Be Ready if Demand for Digital Yen 'Soars': Central Bank Official

Japan needs to keep researching a central bank digital currency, even if it won't launch one just yet, accord to the Bank of Japan's deputy governor.

AccessTimeIconJan 30, 2020 at 10:49 a.m. UTC
Updated Sep 13, 2021 at 12:13 p.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

Japan needs to keep researching a central bank digital currency, even if it won't launch one just yet, accord to the Bank of Japan's (BoJ) deputy governor.

As per a Reuters report on Thursday, Masayoshi Amamiya said at a Tokyo seminar that if advances in payments technology arrive quickly, there may be more demand for a central bank digital currency (CBDC). As such, it's “very important” the bank should lay the groundwork of the technology.

“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,” Amamiya said.

Amamiya said the central bank does not yet plan to issue a CBDC because potential issues need more research, such as the the ramifications for monetary policy and how to ensure security for a possible digital yen. Even so, the BoJ must be "prepared to respond."

The comments come just days after politicians from Japan's ruling Liberal Democratic Party said they would propose the BoJ issue a digital currency. About 70 lawmakers from the party are united in the belief a digital yen is needed to counter the approaching launches of Libra and China's digital currency.

Previously, Amamiya has played down the idea central banks could make negative interest rate policies more effective by issuing their own digital currencies.

If the BoJ issues a digital yen and set a negative interest rate, individuals and businesses would effectively be charged for holding the CBDC, he said last July. As a result, holders would drop the digital currency and instead hold cash, meaning central banks would need to eliminate cash. "No central bank would do this,” the official said.

In today's report, Amamiya further said the issuance of a CBDC would likely not have a great effect on the BoJ's control of interest rates, asset prices and bank lending, but monetary policy could become more complex if "the transmission mechanism" changes, he said.

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 offers all employees above a certain salary threshold, including journalists, stock 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.