Governor Haruhiko Kuroda of Bank of Japan (BOJ) has insisted that there is no significant public demand for a central bank digital currency (CBDC) in the Asian country. Speaking at the 35th anniversary of the Center for Financial Industry Information Systems on December 4, he focused on the hiccups posed by CBDCs and private global stablecoins.
According to Kuroda, there is no need to issue a CBDC in Japan currently since the amount of cash outstanding is still growing. Thus, it appears like there is no demand for CBDC from the public presently. But, the BOJ has been continuously conducting legal and technical research on this matter. It aims to get ready when the need for CBDC 13 may come up in the future.
The central bank may also have to study and understand the impact of the CBDCs on financial intermediation.
Bank of Japan Supports Private Digital Currencies
While Governor Kuroda at the moment does not see any need to issue a CBDC, he admits that there is a growing variety of private digital money that is denominated in Japanese Yen. BOJ encourages the use of these private digital currencies and their enhancement. It aims to make these currencies’ features closer to what may be expected from a CBDC.
The primary strategy that the bank is adopting to enhance these systems is increasing the cashless payment users. It also aims to guarantee interoperability among many payment service providers. The institution introduced a point reward program in October for the users of the cashless payment. This program aims at enhancing the productivity of the involved businesses.
Nonetheless, when it comes to the global stablecoins like Facebook’s Libra, Kuroda stated that BOJ would take a more cautious approach. He added:
“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.”
The governor also reiterated that no GSC should start its operations until all the regulatory, legal, and oversight hiccups and risks are solved. He said that it is important for the authorities throughout the world to join hands and maintain financial stability with free capital mobility in a world full of stablecoins.
In the meantime, countries throughout the world are inccreasingly researching private and public digital currencies and stablecoins. According to previous reports, LifeLabs said that it is creating a dollar-backed stablecoin called BVI~LIFE in partnership with the British Virgin Islands.