Japan’s central bank has said that it has no plans at present to issue a central bank digital currency, citing the impact this may have on financial stability.
In closing remarks at a conference with the International Monetary Fund (IMF) and Japan’s Financial Services Agency (FSA), Masayoshi Amamiya, the Deputy Governor of the Bank of Japan (BoJ), said that in the modern currency system, which consists of a central bank and private banks, it is characterised as ‘a two-tiered system.’
Amamiya stated that:
In this two-tiered system, the central bank specializes in supplying banknotes and central bank deposits, while private banks perform the function of credit creation and provide deposit currencies as broader money. Through such activities, private banks provide payment services to the general public and allocate financial resources to the economy as loans and credits.
Amamiya went on to say that:
The issuance of central bank digital currencies for general use could be analogous to allowing households and firms to directly have accounts in the central bank.
As a result, this may have a significant impact on the ‘two-tiered currency system and private banks’ financial intermediation.’
Notably, while Amamiya said that the BoJ doesn’t have plans at present to issue its own central bank digital currency, the bank realises the importance of ‘understanding innovative technologies not only for maintaining financial stability but also for seeking the possibility of applying them to central bank infrastructure in the
future, Amamiya added.
These remarks come at a time when the FSA has been taking a firmer approach to digital currency exchanges and the way they operate in Japan following the Coincheck hack at the end of January. However, unlike China, which has outlawed cryptocurrency trading Japan is still favourable toward the industry. This can be seen by the fact that it was reported earlier this month that authorities were taking the first steps to legalising initial coin offerings (ICOs), according to a report.
Today it was reported that San Francisco-based digital currency exchange Kraken is to halt its trading services to residents in Japan by June, citing rising costs.
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