Bank of Japan (BOJ) Governor Haruhiko Kuroda said that there is no public demand for a central bank digital currency (CBDC) in the country. However, he encourages the use and development of private cryptos.
4 December 2019 | AtoZMarkets – Japan has been one of the countries that have been more open in embracing cryptocurrencies in general but they continue to maintain that they are not diving into issuing a central bank-based one just yet. Kuroda also touched more on the financial system and payments in Japan in a lecture at the Financial Information System Center (FISC).
Kuroda addresses the challenges posed by Stablecoin
When it comes to Global StableCoins (GSCs) such as Facebook’s Libra, Kuroda said the bank would take a more cautious approach. He evaluated GSC as a convenient payment method that can be used by many people. Nevertheless, the governor said legal clarity and technical stability must be ensured.
He also added that issues such as money laundering, and data protection need to be solved before GSC begins its operations. Furthermore, Kuroda stressed that financial stability is a public good. Global stablecoins nailed to concerns about “excessive consumption” of financial stability are built by national central banks and regulators.
“If the issuer of global stable coins consumes excessive public goods of international financial stability – that is, if it exceeds the issuer's ability to manage risk and significantly expands its business, the risk will increase. When it manifests itself, it will stress the international financial markets, e.g., triggering rapid capital movements. ''
Digital currency is not in demand in Japan right now
As an authority aiming for financial stability, CBDC is a very important theme in terms of expanding retail settlement.
But according to Kuroda, the cash circulation is still increasing. Hence, they can't think the public is asking the central bank to issue digital currency at present. Kuroda concluded by saying he would continue with research so that he could respond to the need in the future.
While the central bank governor does not currently see a reason to issue CBDC, he admits that there is a wide variety of private digital money denominated in Japanese yen. He, nevertheless, encourages the use and development of such private digital currencies. The reason is that they aim to make their features closer to what is expected from a CBDC.
What do you think about Kuroda's speech that there is no need for digital currency in Japan right now? Let us know in the comments section below.