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Bank of Japan Declares State-Issued Cryptocurrencies Are Not Effective Economic Tools

Bank of Japan Declares State-Issued Cryptocurrencies Are Not Effective Economic Tools

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Japanese Central Bank’s current deputy governor Masayoshi Amamiya has once again voiced opposition towards Central Bank issued Cryptocurrencies (CBDCs) in a recent interview with the New York Times.

During a meeting in Nagoya, Japan, Amamiya expressed his doubts about the CBDCs and said that such currencies are unlikely to improve the existing monetary systems and therefore, Bank of Japan itself has no plan to issue digital currencies.

While some experts have considered the CBDCs a tool to control the economy once the interest rate falls to zero, Amamiya has questioned their theory. He is of the opinion that in order for the concept to work, fiat money would have to be eliminated from the financial system in the first place. If the fiat money is not discontinued, then the CBDC will continue to be converted into cash for various reasons and thus the CBDC will be under pressure.

Amamiya said:

“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.”

While a cashless future is touted by many as the future of payments around the world, according to Amamiya, even a progressive country like Japan is not ready for the elimination of fiat currency as cash is still a popular means of payment. He also believes that the shift from fiat currencies to CBDCs is quite a big hurdle to overcome for the central bank because crypto assets are still not considered as a stable means of payment.

While Amamiya may be negating reports of state cryptocurrencies, it is worth mentioning that Japan is one of the most progressive countries in the world regarding technology and cryptocurrency adoption. If CBDCs are eventually proved to be stable, then it is countries like Japan that are likely to adopt them first.

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