BOJ Deputy Governor Expresses Doubts About CBDCs
The deputy governor at the BOJ has expressed his dismay recently about using CBDCs saying they are not quite economically efficient tools. He spoke about the issue on October 20 in Nagoya during a meeting. He doesn’t see these types of currencies improving the current banking systems. Furthermore, he stated that the bank has no plans to adopt or issue cryptocurrencies.
Experts believe that CBDCs are a valuable tool to be used by central banks when interest rates fall and reach zero as cryptos will help them command the economy during these times. This theory suggests that the CBDC will be able to provide the bank with stimulation of the economy through more interest charges on deposits coming from both individuals and businesses; so, this will encourage them to spend money.
Amamiya is not liking this theory. He thinks charging interest rates on CBDCs will work only with one condition—the banks should remove the use of flat currencies from their system entirely, because if they are still an option then customers will continue on converting cryptos to cash as a way to avoid interest. If central banks want to overpower ZLB in terms of interest rates, cash needs to be removed completely.
In Japan, flat money is still a popular form of payment, so this solution in his opinion is not a feasible one for central banks in the country. He further emphasized the fact that the BOJ will not be creating CBDCs for the public to use in trading. Cryptos do not represent a stable currency and crypto funds are highly connected to investments that are speculative, he notes, and the shift would represent major complications for the bank.
Last April, Amamiya gave a similar statement about the use of CBDCs. He claimed that a cryptocurrency backed up by the state could have a harmful effect on the current financial system. But at the time he said the bank was on the lookout for the latest fintech emerging in the market.
Early this week, a policy committee for taxes in Japan discussed its aim to make crypto taxation processes much easier; they called for an alleviation of the current complicated tax filing system.
On October 16, LINE, the leading messaging platform in Japan, launched trading using LINK, their newly developed token on BITBOX exchange platform to much anticipation. They follow the path of other messenger services who had also released their own tokens.