The Bank of Japan, the central bank of the country, currently doesn’t plan to issue its own digital currency, сoncerned that this could negatively affect financial stability. This is written by CoinDesk.
On Friday, in the closing remarks at the IMF conference and the Japanese Financial Services Agency, the deputy governor of the Bank of Japan Masayoshi Amamiya said that the issue of digital currency for direct use by consumers – with or without blockсhain – could jeopardize the existing two-tier financial system.
Currently, central banks provide access to a limited number of institutions like private banks (the first level) that already work directly with consumers (second level). Amamiya calls this process “proven by human wisdom for years, allowing to achieve the efficiency and stability of the monetary system.”
Thus, according to Amamiya, the availability of a digital currency backed by a central bank will change the system, but it will not necessarily preserve its financial stability.
“Therefore, the issuance of a digital currency for the common use of the Central Bank is an analogue of how if we allowed households and firms to open accounts directly with the central bank. This can greatly affect the aforementioned two-tier system and the financial intermediation of private banks,”Amamiya explained his position.
Nevertheless, according to Amamiya, it is possible that the central bank of Japan will issue its own digital currency in the future. His department has already begun to explore the blockchain technology which is the basis of the cryptocurrency, but with a focus on other areas.
For example, there is a partnership between the European Central Bank and the Bank of Japan, within which the research initiative Project Stella was created. Recently, the staff of this project published the results of a study of how new mechanisms for securities settlement can be created using distributed registry technology.