They must act responsibly and comply with various regulations to take root as providers of safe and secure payment settlements, Amamiya told a Reuters Newsmaker event.
While details of Facebook Inc cryptocurrency plan remain sketchy, central banks must be vigilant to the impact such moves could have on their country's banking and settlement systems, he added.
"As for Libra, we must bear in mind that the potential global user-base could be enormous," Amamiya said.
Facebook last month announced its plan to launch Libra within the first half of 2020, part of an effort to expand beyond social media to digital payments.
The project has prompted some European central bankers to claim oversight to ensure it would not jeopardise the financial system or be used to lauder money.
Global central banks have so far largely refrained from regulating digital currencies, having failed last year to reach an agreement on how to do so and concluding they were too small to pose a risk to the financial system.
Cryptocurrencies remain one of the least-regulated areas of finance, and the response of domestic and international financial regulators and monetary authorities to the Libra project will have a crucial impact on its prospects.
Rapid changes in financial innovation have also led some central banks to consider issuing digital currencies, or at least study the feasibility of doing so in the future.
Amamiya said the BOJ had no plans to issue digital currencies for now partly due to uncertainties over how it affects conventional commercial banking.
"If central bank digital currencies replace private deposits, that could erode commercial banks' credit channels and have a negative impact on the economy," Amamiya said.
He also brushed aside the idea that central banks can boost the effectiveness of negative interest rate policies by issuing digital currencies.
If central banks issue digital currencies and apply negative rates on them, households and companies will hold cash instead to avoid being charged for holding digital currencies, he said.
"To overcome the nominal zero lower bound, central banks would need to eliminate cash," Amamiya said. "Eliminating cash would make settlement infrastructure inconvenient for the public, so no central bank would do this."
(Reporting by Leika Kihara; Editing by Chris Gallagher and Jacqueline Wong)
By Leika Kihara