- Hiromi Yamaoka, an ex-official from the Bank of Japan, urges the institution to not go with the idea of Digital Yen.
- Japanese Households might spend more if the Digital Yen becomes a mode of settlement across the country, doubts Yamaoka.
- China will use the product for the upcoming Beijing Olympics, and Japan to closely watch the experiment.
The former leader of the financial settlement department in the Bank of Japan, Hiromi Yamaoka, requested the financial institution to not use the Digital Yen as a part of the country’s monetary policy. He believes that digital assets can pose threats to the local economic system.
Working in accordance with the other Central banks across the globe, the Bank of Japan also has its eyes set on creating its Central Bank Digital Currency. The institution launched its first testing program to test the feasibility in technical terms of the same in April last year. It will include two phases, and the first testing program is planned to finish off in Quarter one of this year.
Japanese Households might incur more expenditure
Although the ex-official of Bank of Japan was in favour of the need to change Japan’s payment systems facilitating it with digital money. But he’s not so supportive of the Digital Yen and proposed that the Bank should not incorporate the digital currency to support its policies.
Hiromi Yamaoka is currently leading a private-sector digital currency project. He predicted that Central Bank Digital Currencies could have adverse effects on Japan’s financial system. He further advised everyone against the idea after doing a lot of research.
He doesn’t go with the idea of some people thinking that negative interest rates could work effectively with digital currency.
He’s sceptical about the more expenditures by Japanese households if the Digital Yen is adopted widely across the country.
On the other hand, China which is also in favour of CBDCs announced that it would allow the athletes and spectators to use it during the Beijing Olympic games starting this week. The Japanese Finance Minister Shunichi Suzuki plans to notice the Chinese experiment closely.
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Not everyone is entirely a fan of CBDCs as of now. Earlier in the year, The Fed also discussed the same and published a report regarding them, showing scepticism about the product. The Fed concluded that CBDCs might alter America’s Financial stability and might not enhance the current means of payment.
Though CBDCs might facilitate faster payment modes, it also poses threats to citizens’ privacy because the government can wholly control them. Apart from Japan, China, the Bahamas, Sweden etc., have been developing their own CBDCs.
There is a global scepticism going around regarding the CBDCs, whether it is to look forward to what the future might bring for the product and how the people will accept them.
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Source: https://www.thecoinrepublic.com/2022/03/27/cbdcs-have-adverse-consequences-for-the-financial-system-former-boj-official/