Central banks must better understand the advantages and risks of issuing their own digital currencies, and look at methods to mitigate any associated threats, Bank of Japan Deputy Governor Masayoshi Amamiya stated Thursday.
By introducing their own digital currencies, central banks can act as a bridge for private sector money circulations and streamline settlement, Amamiya stated.
All the same, such a practice might stifle private-sector financial innovation and draw money away from deposits at commercial banks if they achieve issuing low-cost digital currencies, he stated.
Some developing economies are looking seriously at issuing central bank digital currencies (CBDC) due to the need to curb money laundering or to deal with a lack of resilient financial infrastructure.
Japan and lots of different superior economies don’t face such issues that require them to issue CBDCs immediately, he stated.
The current position among advanced economies is to deal with money laundering via regulations and oversight – rather than issuing CBDCs, he stated.
Nonetheless, the BOJ will set up a crew within the bank looking into CBDCs and work closely with its abroad counterparts on the topic, Amamiya stated.
Facebook’s urge to launch its Libra cryptocurrency has triggered central banks to fast-track reviews of launching digital currencies.
The central banks of Britain, Japan, Canada, Sweden, and Switzerland in early January declared a program to share experiences to look at the case for introducing digital currencies, amid a growing debate over the future of money.