China continues to pull ahead in the central bank digital currency race as more details on its secretive digital yuan project intermittently surface. As a result, more countries are beginning to worry about the potential implications.
Over the past few weeks, a number of Japanese lawmakers have publicly expressed their preference for a CBDC controlled by the Bank of Japan. The general idea is to counter the soon-to-be-released digital yuan from neighbouring China and prevent it from disrupting the global economy.
According to a senior ruling party lawmaker, the development of a Japanese CBDC might take “two to three years.” Will it come too late to serve as a challenge for Beijing? What might a BoJ-issued currency look like?Bank of Japan vs. CBDC: A preference for cash
The Bank of Japan’s relationship with CBDCs can be traced back to April 2018, when the agency’s Deputy Governor Masayoshi Amamiya first addressed the topic publically. Although the tone of his comment was predominantly negative, the official did not rule out the possibility of considering the bank’s own cryptocurrency.
Specifically, Amamiya argued that issuing a CBDC for general use would undermine the existing financial system, as that would allow consumers to open accounts directly at the central bank and hence abandon private banks altogether, putting them at a major disadvantage:“The issuance of central bank digital currencies for general use could be analogous to allowing households and firms to directly have accounts in the central bank. This may have a large impact on the aforementioned two-tiered currency system and private banks' financial intermediation.”
The central bank’s representative concluded that although his agency was not considering issuing its own virtual currency, it nonetheless realized that the application of emerging technologies was a possibility.
Half a year later, in October 2018, Amamiya reiterated his mostly negative sta...