The former director of the Financial Settlement Department of the Central Bank of Japan, Hiromi Yamaoka, advised the regulatory body to avoid the implementation of the digital yen as part of the country’s monetary policy, as he fears that it will be detrimental to the nation’s economy.
No to the digital yen for Japan
Like many other central banks around the world, the Bank of Japan is working on a digital version of its national currency.
The agency began testing in April 2021 to determine the technical feasibility of the product. The project will be carried out in two stages, the first is expected to be completed by March this year.
However, Hiromi Yamaoka, a former BOJ official, disagrees with Japan’s CDBC. Despite saying that the digital yen can improve Japan‘s payment networks, he believes that the central bank should not use the digital yen to gain political influence.
Yamaoka, who is now in charge of a private sector digital currency initiative, forecasts CBDC disaster for the local financial network. The benefits of applying negative interest to a CBDC are unclear:
“Some argue that negative interest rates work better with digital currencies, but I disagree (…) the digital yen will not increase expenses in Japanese households.”
It has been revealed that China will allow athletes and spectators to use its central bank’s digital currency during the Beijing Olympics which start next year.
Shunichi Suzuki, Japan’s Finance Minister, acknowledged China’s efforts and said his ministry will closely watch the test.
Fed and its drawbacks
The Central Bank of the United States or the Federal Reserve, FED, is also wary of CBDCs. As the agency has indicated, “secure and digital payment options for households and companies” could be created. Transactions with CBDC could speed up international settlements.
However, the government could completely control the monetary product if it were digital. The FED considers that this would be detrimental to the economic and financial stability of the United States.
