“Central Bank Issued Digital Currencies are not reliable economic tool” Bank of Japan

“Central Bank Issued Digital Currencies are not reliable economic tool” Bank of Japan

Crypto Market
November 16, 2018 by admin
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The New York Time reports on October 20 that the Bank of Japan’s (BOJ) deputy governor Masayoshi Amamiya has currently reiterated his negative stance toward the central bank issued digital currencies (CBDC). The article also reports that some of the financial experts consider a CBDC as the tool for central banks for effective control the
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The New York Time reports on October 20 that the Bank of Japan’s (BOJ) deputy governor Masayoshi Amamiya has currently reiterated his negative stance toward the central bank issued digital currencies (CBDC). The article also reports that some of the financial experts consider a CBDC as the tool for central banks for effective control the economy once interest rates fall to zero.

Amamiya expresses his doubts about the use of CBDCs while speaking on Saturday in Nagoya, central Japan at a meeting where he also claims that such kind of digital currencies is unlikely to make some improvements in the existing monetary systems.

Further, he also stated that the Bank of Japan does not make any plan to issue such digital currencies. The article later reports that some financial experts refer to the CBDC as a tool for the central banks to have effective control of the economy for once when interest rates fall to zero. The theory also specifies that a CBDC would enable central banks to stimulate the economy by charging more interest in the deposits from the firms and individuals that can, in turn, induce them to spend more money.

In addition to all these things, Amamiya also questioned the theory and claim that the charging interest on central banks issues currencies would only work if the central banks eliminate the fiat money from the different financial systems. If the things will not do so, then the public will still continue to convert the digital currencies into cash in order to avoid the issues of paying interest.

Later in the report, he also quoted that, “In order for central banks to overcome the zero lower bound on nominal interest rates, they would need to get rid of cash from society.”

In turn, the elimination of the fiat money is “not an option for us as a central bank” since cash is considered as one of the most powerful methods to make payment in the country till now, according to the Amamiya.

In April, Amamiya offers a similar sceptical statement on the CBDCs by claiming that the state-backed crypto could have a negative impact on the existing financial system. However, at that time, Amamiya also claimed that the bank was still eyeing on the emerging market fintech such as crypto in the near future.

The Bank of Japan deputy governor stressed that the bank is not planning to create the CBDC that can be widely used by the public for different payment and settlement purposes. The shift which was based on the bank issued crypto from the existing sovereign currencies is now considered as ‘quite a high hurdle” while the crypto assets are often associated with the speculative investment which does not represent the stable means of payment, according to Amamiya.

Earlier in this week, a Japanese taxation policy committee usually held a discussion that aims to facilitate the cryptocurrency tax reporting process with the participants calling to alleviate the existing complex tax in filing regime.

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