Japan No Plans for Central Bank Crypto
This is due to Stability Issues
The Bank of Japan (BOJ), which is the central bank in the country, does not have any plans to grant the central bank digital currency (CBDC). This is due to the fact that they are worried about the stability issues.
According to a closing remark they made while at a meeting with japans financial services agency and the international monetary fund, Masayoshi Amamiya who is the deputy governor of BoJ said that launching a digital currency to the consumers- of its Blockchain based or not- could lead to an undermining of the current two-tiered system.
As per the current time, central banks can only grant the required access to the private banks, which have the ability to have direct consumer contact in the second tier. Therefore, Amamiya praises this process as “the wisdom of human beings in history to achieve both efficiency and stability in the currency system.”
Therefore, the deputy governor carried on with the explanations that enacting the digital currency to be backed by the central bank might bring about a change in the system and this won’t prove financial stability.
“In this regard, 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. This may have a large impact on the aforementioned two-tiered currency system and private banks’ financial intermediation.”
Therefore, Amamiya does not eliminate the possibility of the bans cryptocurrency in future due to the fact that they have begun looking at the underlying Blockchain technology. However, the current Blockchain technology is used for business applications.
As it was reported before, through the European central bank partnership, BoJ has already started working on the project called Stella. Recently, they have published research results on the basis in which they can use the distributed ledge technology in the creation of new securities settlement mechanisms.