Bank of Japan should be prepared to launch a digital central bank currency (CBDC) amid development of blockchain technology, said Masayoshi Amamiya, the bank’s deputy governor.
“The speed of technical innovation is very fast. Depending on how things unfold in the world of settlement systems, public demand for CBDCs [central bank digital currencies] could soar in Japan. We must be prepared to respond if that happens.”
CBDC is a cryptocurrency issued by a central bank with a legal tender status and other centralized fiat coin properties.
While the official has not envisaged the issuance of CBDCs that had a significant impact on monetary policy effectiveness, he identified technical innovations within settlement systems as an area worth monitoring closely:
“The transmission mechanism […] could become more complicated and difficult (to break down) if settlement systems change.”
Cryptolydian earlier reported that the Bank of England has teamed up with the central banks of Canada, Japan, the EU, Sweden and Switzerland to explore the possibility of launching a digital central bank currency.
They formed a working group with the Bank for International Settlements (BIS), through which they can share their expertise and take the necessary procedures in this regard.
Several central banks across the globe started to explore different types of cryptocurrency, including the CBDC.
Asian markets are set to spearhead the world in terms of dominating the cryptocurrency industry during 2020, especially amid a drive towards setting related regulations by Asian central banks, with an eye on establishing cryptocurrency and blockchain hubs.
The Chinese government continues its support to blockchain industry at all levels, which will lead to technological advancement across Asia, according to CoinGecko co-founder Bobby Ong.
This trend is contrary to what is seen in the US, where things are progressing at a slow pace as market regulators continue to procrastinate over their classification.