The deputy governor of Japan’s central bank said today that it must get ready to issue digital currencies, given the rapidly changing world of global payment and settlement systems.
“The speed of technical innovation is very fast. Depending on how things unfold in the world of settlement systems, public demand for CBDCs [central bank digital currencies] could soar in Japan,” said Masayoshi Amamiya at a seminar in Tokyo on Thursday, according to Reuters. “We must be prepared to respond if that happens.”
Why Japan wants its own digital currency
Japan is joining a growing list of countries around the world with their sights set on their own state-backed digital currency. Norihiro Nakayama, Japan’s parliamentary vice minister for foreign affairs, told Reuters earlier today that lawmakers are looking into issuing a digital version of the yen, the country’s national currency. The project would be a joint venture between the government and several private companies based in Japan, with the aim of keeping their nation one step ahead in the d...
Amamiya said that the Bank of Japan didn’t have any plans to issue it just yet, but said that researching the issue is “very important.”
He thinks central banks won’t affect interest rates, lending and asset prices, but that “the transmission mechanism...could become more complicated and difficult (to break down) if settlement systems change,” Amamiya reportedly said.
Amamiya’s comments build on previous comments by Japanese officials. Last week, Norihiro Nakayama, Japan’s parliamentary vice minister for foreign affairs, told Reuters that a digital yen is on the cards, and that a proposal could be submitted as soon as next month.
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After feeling the pressure from Facebook’s Libra push, Chinese officials announced just weeks ago that they were preparing to release China’s own central bank digital currency to compete with and potentially stop Libra. Now, China claims its state-run cryoptocurrency is ready to go. But can it effectively counteract the threat to China’s financial system that Chinese officials say Facebook’s crypto project poses? Within a matter of weeks, China has gone from merely accelerating its plans for it...
“China is moving toward issuing digital yuan, so we’d like to propose measures to counter such attempts,” said Nakayama.
Earlier in January, Finance Minister Taro Aso said that a popular digital yuan would be a “very serious problem” to Japan, which settles transactions in US dollars.
The governments of Japan and China cited the Facebook-led stablecoin network LibraLibra as a reason for hastening their plans for a CBDC.
Last July, Nikkei Asian Review found that Japanese lawmakers were concerned that regulation Libra would be challenging, since Libra’s value is tied to a basket of assets (including the yen and the US dollar), and is thus outside of the remit of monetary policy.
In the same month, Wang Xin, the director of the People’s Bank of China, said that a digital currency like Libra could be bad for the country.
