Governor Haruhiko Kuroda was discussing stablecoins and central bank cryptocurrencies at a symposium event this week, where he said there was no reason to issue a central bank digital currency in the current climate.
Pointing to an increasing amount of cash in the Japanese economy, Karouda said that while the need may arise in future, there was currently no good case for issuing a central bank digital currency (CBDC).
In Japan, the amount of cash outstanding is still increasing, and it does not seem that there is a demand for CBDC from the public at present. Nevertheless, the Bank of Japan has been conducting technical and legal research on this matter in order to stand ready when the need for CBDC 13 may arise in the future. The Bank also needs to study the impact of CBDCs on financial intermediation.
While the demand may not yet exist for a central bank cryptocurrency, the governor noted that there is already “a wide variety of private digital money denominated in Japanese yen.”
The bank is actively promoting these private alternatives, with a range of measures to encourage cashless payments and deliver interoperability between different payment services and providers.
Addressing the risks of global stablecoins like Facebook’s Libra, the governor said the bank would continue to take a cautious approach.
“Global stablecoins (GSCs), such as Libra, may offer convenient payment services to many users, if legal certainty and technical stability are ensured. However, users cannot continuously appreciate the benefits of GSCs unless various challenges and risks related to money-laundering, cyber-security, data protection, and consumer and investor protection are properly addressed,” he said.
Karouda said that no stablecoin should be allowed to launch before the challenges around legality and regulation could be addressed, highlighting the need for central banks and regulators around the world to work together in maintaining the stability of the financial system with stablecoins.
It comes at a time of increasing interest in digital currencies from central banks around the world.
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