Japan new financial regulator chief calls for digital yen

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The incoming head of Japan’s Financial Services Agency (FSA) has urged the country to accelerate its efforts towards issuing a central bank digital currency. He also urged for caution regarding relaxing the existing digital currency laws, claiming that there are better ways to promote innovation.

Ryozo Himino took over as the head of the FSA in July. While new to the office, he has been involved in digital currency regulation for years. In 2019, he chaired the G20 meeting on digital currencies which called for stricter rules for the industry.

Speaking to Reuters, Himino voiced his concern over calls to relax the current digital currency laws.

“Deregulating bitcoins and other cryptocurrencies may not necessarily promote technical innovation, if doing so simply increases speculative trading,” he told the outlet.

While he sees a bright future for digital currencies, especially in Japan, he claimed that the government shouldn’t be devoting it’s time to promoting the industry. Rather, it should focus on developing and issuing a CBDC.

Japan’s central bank has been stepping up interest in a CBDC in recent months. The bank appointed its top economist to head the CBDC initiative a week ago. It also included considerations for a CBDC in its official economic plan.

“In the end, Japan must think really hard about whether to issue CBDCs because there are merits and demerits to doing so. What it can do now is to be ready so that when Japan decides to issue CBDCs, it can do so straight away,” he remarked.

Japan should stop focusing on the challenges of issuing a CBDC and instead focus on developing the digital yen, he advised.

Himino believes that the coronavirus pandemic has made the need for a cashless society greater. The virus has infected over 48,000 people in the East Asian country, with over 1,000 deaths. This makes it critical for the government to accelerate its efforts towards developing digital payment systems. The digital yen could play a big role in this transformation, he believes.

Japan has been a global leader in digital currencies, having been one of the first countries to recognize them as legal tender. The FSA has played a crucial role, regulating the industry at a time when most countries took a wait-and-see approach. The enabling environment has seen the rise of some of the world’s largest exchanges.