A blockchain-based central bank digital currency issued to the public would allow wider and unrestricted access to payment and settlement systems, the deputy governor of the Bank of Japan said earlier on Friday.
Hiroshi Nakaso, deputy governor of the Bank of Japan – the nation’s central bank – was speaking [PDF] at an official forum addressing the ‘Future of central bank payment and settlement systems’. The senior central bank official made remarks specifically toward the ‘effective use’ of the central bank’s payments recently launched ‘BOJ-NET’ [PDF] payments platform, a next-gen RTGS system, when he spoke on the subject of digital currencies issued by central banks.
“[W]hile virtual currencies like Bitcoin have emerged under the trend of FinTech, some people argue that central banks should consider issuing digital currencies, which could partially replace banknotes,” Nakaso stated.
Notably, he added:
Such arguments would mean applying digital technology even to banknotes, which have always been based on paper-based technology. This could have a subtstantial impact on the traditional concept of banknotes.
Central bank digital currencies, or CBDCs, have been explored by a number of central banks around the world. Prominent efforts include those taking shape in China, Singapore, the UK and Sweden, among several others. As CCN.com reported in December, Bank of Japan staff were ‘test-driving’ blockchain technology following a partnership with the European Central Bank. In March this year, the director-general of the central bank’s payment and settlement systems department stated that the bank would “seriously consider” what would be possible for a digital currency.
In further remarks last week, Nakaso spoke about the differing scenarios in which a central bank digital currency would be issued.
If CBDC is directly issued to the general public, it would allow wider access to central bank payment and settlement systems both in time and space.
Nakaso has previously touched on the subject of digital currencies publicly, whilst stating that blockchain was ‘invented in 2008 with the concept of bitcoin.’ The official also confirmed that while the central bank would do its utmost to “deeply understand” blockchain technology, there was “no specific plan to issue digital currencies as a substitute of banknotes.”
In his most recent remarks, the official also spoke of an ‘extreme case’ scenario.
In an extreme case in which CBDC provides the same functionality as banknotes as an alternate measure, it could enable everyone to access central bank accounts 24/7, year-round.
The subject of central bank account offerings to retail or commercial customers has previously been broached by Nakaso.
[T]o whom should the central bank provide its account, as technological innovation changes the financial structure and the list of financial service providers?” the official asked, raising questions toward a discussion last year. “To what extent should the central bank provide “finality” to economic society? How should the information linked to payment transactions be handled?”
Image from Shutterstock.
Last modified: June 10, 2020 1:27 PM UTC