In brief
- The Bank of Japan is slowing talk of a digital yen and calls for further international scrutiny on CBDCs.
- Lawmakers had previously signaled they were moving fast towards a digital yen.
- The international community is feeling pressure to act as China and Facebook race to issue their own digital currencies.
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After lawmakers in Japan had initially signaled that the country could move quickly to issue its own digital currency, its central bank is now urging restraint on a digital yen.
The deputy governor of the Bank of Japan today called for further scrutiny of the potential risks of issuing a central bank digital currency (CBDC), especially for a developed nation such as Japan. “Unlike emerging economies, we cannot and should not jump immediately,” Deputy Governor Masayoshi Amamiya said in speech in Tokyo, according to Reuters.
Amamiya said the international community “must conduct a comprehensive study on how it affects their settlement and financial systems” before issuing a CBDC. Amamiya acknowledged that developing countries are looking to issue digital currencies to revamp poor financial infrastructure and to counteract money laundering, but said Japan and advanced economies don’t face the same pressure.
This comes after Japanese lawmakers said just weeks ago that they planned to submit legislation that would establish a joint public-private venture to issue a digital yen.
Governments around the world are feeling the pressure to act on digital currencies. Officials from China and Japan both specifically referenced the Facebook-led Libra project, a proposed stablecoin pegged to a basket of fiat assets, as a reason for hastening their efforts. Two weeks ago, Federal Reserve Chairman Jerome Powell said Libra was a “wake-up call” and has likewise affected the US central bank’s thinking on a digital currency.
Among the major economies, China appeared to be the most prepared to issue a CDBC, though the recent coronavirus outbreak may have now slowed its progress, according to the state-backed Global Times.
Canada, like Japan, remains cautious on a central bank digital currency but is now nonetheless developing its own prototype—along with at least 10 percent of the world’s central banks, according to the Bank of International Settlements.