Digital Yen Will Not Benefit Japan’s Financial Network, Former BOJ Official Claims

Hiromi Yamaoka, the former head of the Bank of Japan’s financial settlement division, urged the institution not to use the digital yen in the country’s monetary policies. He fears that the product could cause severe damage to the local economy.

Japan should not aim at digital yen

Like many other central banks around the world, the Bank of Japan also has a vision to create a digital version of its national currency. The Bank of Japan launched a program to test the technical feasibility and design of such a product in April 2021. As the first phase is expected to be complete by March, there will be two phases to this trial.

Hiromi Yamaoka, an ex-member at the BOJ, isn’t so supportive. Although he stated that Japan’s payment system needs to be changed with digital money, he said that the central bank shouldn’t use the digital yen for additional policy leverage.

Yamaoka, who is currently responsible for a digital currency project in the private sector, said that a CBDC could have devastating consequences for the local financial system. He said that negative interest applied to CBDCs has not been clearly defined.

“Some people believe that negative interest rates can be more effective with a digital currency. But I don’t believe so.”

He also believes that Japanese households won’t spend more even if the digital currency is used for mass settlements.

Hiromi Yamaoka, Source: Reuters

China, the world’s leader in launching a digital currency central bank, announced that it would allow spectators and athletes to use the product at the Beijing Olympic Games (which began this week).

Shunichi Suzuki, Japan’s Finance Minister, stated that he was aware of Chinese efforts and assured that the Ministry would closely monitor the experiment.

The Federal Reserve also sees some minuses

The USA’s central bank also doubts CBDCs. The Fed expressed doubts about CBDCs earlier this month. They stated that such monetary products could provide “safe, digital payment options for households and businesses.” CBDC transactions could lead to faster settlement opportunities between countries.

The digital currency could be used to control people’s privacy. The Federal Reserve stated that it could also cause damage to America’s financial stability, and not improve the existing payment methods.

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Marla Brooks

Marla Brooks – Financial Analysis My name is Marla Brooks, and I am the mainstream behind the”observednews.com”  for the powerful and most delicate insights into the latest activities in the financial analysis category. I started my journey as an independent financial consultant. I had approximately nine years of experience in this field. I am free soul so; my passion for exploring the world has taken me to the nations across the globe and given me the chance to report for a portion of the best news associations. Currently, I am a full-time editor as experienced in finance and started to use my abilities.

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