BOJ Governor: Japan Has No Plans for Central Bank Digital Currencies

BoJ Governor Masayoshi Amamiya has reiterated his skeptical stance regarding the idea of issuing central bank digital currencies. He also claimed that the BoJ does not have any plans to issue digital currencies. 

22 October 2018 – The Bank of Japan’s (BOJ) deputy governor, Masayoshi Amamiya, has once again reiterated his negative outlook concerning central bank-issued digital currencies (CBDC).

CBDCs Will not Improve Financial System

He spoke this past Saturday during a meeting in Nagoya. During his speech, he expressed doubts regarding the use of CBDCs, stating that such currencies are not likely to advance the existing monetary systems. He also claimed that the BoJ does not have any plans to issue digital currencies. 

Online reports note that some of the financial experts consider a CBDC a tool for central banks to control the economy once interest rates drop to zero levels. As per this suggestion, a CBDC would allow central banks to stimulate the economy by charging more interest on deposits from individuals and firms. This, in turn, would encourage them to spend more money. 

Amamiya has questioned this theory. He claimed that charging interest on central-bank issued currencies would only be applicable if central banks would eliminate fiat money. In any other case, the public will still continue converting cryptocurrencies into cash. This would be done in order to avoid paying interest. He noted:

“In order for central banks to overcome the zero lower bound on nominal interest rates, they would need to get rid of cash from society.”

Amamiya stated that the elimination of fiat money in Japan is “not an option for us as a central bank.” This is due to the fact that cash is still a popular method of payment. 

Will Japan ease the tax reporting regime?

The BoJ deputy governor highlighted that the bank is not planning to create a CBDC that can be used by the wide public. The change to bank-issued cryptos from the existing sovereign currencies is regarded as “quite a high hurdle.” At the same time, crypto assets are often associated with speculative investments. He also added that digital currencies are not a stable means of payment. 

Back in April, Amamiya offered a similar doubtful statement on CBDCs. He noted that a state-backed cryptocurrency could have a negative impact on the existing financial system. Yet, he also noted that the bank was still mulling the adoption of fintech technologies like crypto in the future.

Earlier this week, the taxation policy committee in Japan held a discussion that aimed to ease the cryptocurrency tax reporting process. The members of this committee have called for the alleviation of the existing complex tax filing routine. 

In this context, Japanese messaging giant LINE established trading of its LINK (LN) token on its native BITBOX cryptocurrency exchange. 

Think we missed something? Let us know in the comments section below. 

Share Your Opinion, Write a Comment