Bank of Japan Deputy Governor Amamiya: Cheaper CBDCs could stifle private sector innovation
|- BoJ deputy governor foresees CBDCs affecting countries’ financial intermediation due to a shift in funds.
- Central banks have to learn the pros and cons of CBDCs and seek ways to mitigate the risks.
The deputy governor of the Bank of Japan (BoJ) Amamiya in recent remarks says that central banks are bound to remain lenders of some kind even at the time when digital currencies are issued. Therefore, there is a need to carry out a monetary policy through the control of digital money flows.
Amamiya believes that central banks considering issuing their own digital currencies around the world should “conduct a comprehensive study on how it affects the country’s settlement and financial systems.” The deputy governor also warned against issuing cheaper central bank digital currencies (CBDCs), which is likely to stifle innovation in the private sector.
Moreover, if we reach a point where households and businesses start to prefer CBDCs over bank deposits then that could affect countries’ financial intermediation through shift in funds. Lastly, Amamiya said that central banks must seek to learn the pros and cons of CBDCs and explore ways on how to mitigate the risks.
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