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Bank Of Japan Rejects Central Bank Issued Digital Currencies

At a meeting in Nagoya, central Japan, on Saturday, the deputy governor of the Bank of Japan (BOJ), Masayoshi Amamiya spoke about his reservations about the use of central bank issued digital currencies, as according to him, such digital currencies were highly unlikely to improve the monetary system that existed in Japan. He also expressed that the BOJ did not have plans to issue such digital currencies.

New York Times report of Oct. 20, reiterates this stance by the deputy governor. Many financial experts, according to the article, consider CBDC as an instrument that will be used by the central banks to control the economy, once the interest rates fall to zero. The central banks with the help of CBDC will be able to stimulate the economy by claiming more money from individuals and firms as increased interest on deposits.

Amamiya has rejected this theory by saying that this policy will only work if central banks terminate fiat currency altogether from the financial framework. This, however, is not a possible scenario for the BOJ, as cash still is the primary method of conducting transactions in the country.

He emphasises on the fact that his bank was not planning to create a CBDC for use by the public for either settlement or payment purposes. He also noted that since cryptocurrencies are often subject to speculative investments, and are not a stable means of payment, shifting from sovereign currency to bank-issued crypto would indeed be quite the hurdle.

Amamiya, in April, had given out a statement with a similar sceptic tone, which said that the financial system could be hampered by state-backed crypto.

However, in spite of these mostly negative signals, a Japanese taxation policy committee held a meeting and discussed how to facilitate a hassle-free tax reporting process for cryptocurrencies, which would get rid of the existing complex tax filing regime.