Although the Bank of Japan has no immediate time frame to issue digital currencies, the central bank’s deputy governor said it should explore the possibility and be ready, Reuters reported on Thursday (Jan. 30).
Masayoshi Amamiya said that if technology triggers increased public interest, it is possible there could be a need for the issuance of central bank digital currencies (CBDC).
There are still many details that must be investigated before CBDC can be issued, Amamiya said. There are issues on the table, such as its effect on monetary policy and making certain rigorous security standards are implemented.
But he stressed he felt it was “very important” that the BOJ continues to scrutinize the feasibility of circulating CBDC. His stance has been the strongest so far from a central bank official regarding electronic money.
“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 in a seminar in Tokyo on Thursday (Jan. 30). “We must be prepared to respond if that happens.”
Amamiya said he doesn’t foresee CBDC changing how the current monetary policy affects areas like interest rates, asset prices and lending.
“But the transmission mechanism … could become more complicated and difficult (to break down) if settlement systems change,” he said.
According to several U.S. academics, electronic currencies could make it easier for central banks to enact negative interest rates on deposits. Amamiya said that scenario is “worth looking into.”
The announcement by Facebook about the launch of its Libra cryptocurrency coin has prompted central banks to seriously consider issuing electronic money.
As the future of money is discussed, the central banks of Britain, the eurozone, Japan, Canada, Sweden and Switzerland have recently said they would collaborate as a group on what is entailed for issuing digital currencies.