Masayoshi Amamiya Doubles Down on Japan Not Issuing a Crypto

Wilfred Michael 

Wilfred Michael

News reporter

05 July 2019,
18:54
Masayoshi Amamiya Doubles Down on Japan Not Issuing a Crypto

Different countries around the world hold different opinions regarding the prospects of issuing a central bank-backed digital currency (CBDC).

While some like Venezuela has released one, other countries like Cuba is considering it while the Eastern Carribean Bank is already piloting a CBDC issuance project.

However, the same cannot be said of regions like South Korea, and now Japan.

Masayoshi Amamiya, Deputy Governor of the Bank of Japan (BoJ) told Reuters this week that his institution has no plans to issue a CBDC anytime soon. He also shared insights regarding why the BoJ is not considering the move.

According to Masayoshi, the implications of a CBDC on the commercial banking system at this point is negative since once of its primary application is to replace bank deposits and replace the use of cash.

Essentially, the central bank official argues that “if central bank digital currencies replace private deposits, that could erode commercial banks’ credit channels and have a negative impact on the economy.”

He also spoke against one of the positive reasons why countries that issue a CBDC do so, that is, boosting the effectiveness of negative interest rate policies.

Masayoshi explained that if central banks issue digital currencies with the intent of applying negative rates on them, then citizens would prefer to hold cash to avoid the charges associated with owning a CBDC.

If that happens, the viable option for central banks to overcome the nominal zero lower bound would be to eliminate cash; something believes no central bank would do at the moment.

“Eliminating cash would make settlement infrastructure inconvenient for the public, so no central bank would do this,” the top official concludes.

 

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