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BOJ's Amamiya calls for more scrutiny in issuing digital currency

02/27/2020 | 02:44am EST
Bank of Japan Deputy Governor Masayoshi Amamiya speaks during a Reuters Newsmaker event in Tokyo

Central banks must get a better understanding of the benefits and risks of issuing their own digital currencies, and look at ways to mitigate any associated perils, Bank of Japan Deputy Governor Masayoshi Amamiya said on Thursday.

By issuing their own digital currencies, central banks can act as a bridge for private sector money flows and streamline settlement, Amamiya said.

All the same, such a practice could also stifle private-sector financial innovation and draw money away from deposits at commercial banks if they succeed in issuing low-cost digital currencies, he said.

"When countries consider issuing central bank digital currencies, they must conduct a comprehensive study on how it affects their settlement and financial systems," Amamiya said in a speech in Tokyo on Japan's settlement system.

Some emerging economies are looking seriously at issuing central bank digital currencies (CBDC) because of the need to counter money laundering or to deal with a lack of resilient financial infrastructure.

Japan and many other advanced economies do not face such problems that require them to immediately issue CBDCs, he said.

"Unlike emerging economies, we cannot and should not jump immediately" towards issuing CBDCs, Amamiya said.

The current stance among advanced economies is to deal with money laundering through regulations and oversight - rather than issuing CBDCs, he said.

Still, the BOJ will set up a team within the bank looking into CBDCs and work closely with its overseas counterparts on the topic, Amamiya said.

Facebook push to launch its Libra cryptocurrency has prodded central banks to fast-track reviews of issuing digital currencies.

The central banks of Britain, the euro zone, Japan, Canada, Sweden and Switzerland last month announced a plan to share experiences to look at the case for issuing digital currencies, amid a growing debate over the future of money.

(Reporting by Leika Kihara; Editing by Tom Hogue & Shri Navaratnam)

By Leika Kihara

ę Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
CANADIAN DOLLAR / JAPANESE YEN (CAD/JPY) -0.34% 89.071 Delayed Quote.9.11%
EURO / JAPANESE YEN (EUR/JPY) -0.29% 128.058 Delayed Quote.1.79%
FACEBOOK INC -2.33% 333.12 Delayed Quote.21.95%
ONE STOP SYSTEMS, INC. -2.01% 5.37 Delayed Quote.34.25%
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