A senior Bank of Japan (BoJ) official has stated that bitcoin and other Fintech innovation isn’t a threat to the fiat money central banks print.
According to Hiromi Yamaoka, head of the BoJ’s payment and settlement systems department, central banks need to maintain the public’s trust. This is because the growth of FinTech provides people with a substitute to cash, reports Reuters.
This year, Hiroshi Nakaso, the deputy governor of the BoJ, stated that central banks would have to watch the progress and developments relating to bitcoin and blockchain.
In a speech, he stated that the financial market’s infrastructure is going through a period of innovation which is producing changes in the payments and settlement systems.
Speaking to Reuters, Hiromi Yamaoka said that the growth of bitcoin was one of the topics being studied by the bank.
Fintech is an area with potential to revitalise Japan’s economy. That’s why policymakers want to work hand in hand with the private-sector.
In a country such as Japan, which has a solid financial institution where the public has trust in the financial sector, it’s important for banks and startups to work together, added Yamaoka.
Unlike the collapse of the Lehman Brothers in 2008, which saw public trust in banks plummet after the bail-out of the banks with taxpayers’ money, Japan wasn’t affected.
Of course, with the rise of financial technology being utilized to reduce costs, Yamaoka believes that maintaining financial infrastructure could decrease as more attention is focused on FinTech.
He explained that one of the trends witnessed through FinTech was down to the fact that financial services could be provided via smartphones without the requirement of an actual building.
In that trend, the heavy infrastructure of ATMs and branches means it’s difficult to gain a competitive advantage.
A report from August found that due to a lack of experts in Japan, the country may fall behind in the race to become the winner of the blockchain race that could see it take center stage for financial use.
In a bid to bridge the gap, however, Japan announced later in August that a new consortium of Japanese banking and financial giants are planning on looking into the use of the blockchain technology. They plan on providing domestic and foreign exchange services from October 2016.
Whether or not Japan falls behind in the blockchain race is still to be determined, but one thing is for sure: FinTech is beginning to grab the attention from central banks around the world who are now realizing its potential to disrupt the current payment settlement systems.
Featured image from iStock.