Central Banks Should Observe Blockchain, Says Japan’s Central Bank Official
The Deputy Governor of the Bank of Japan, the country’s central bank, has stated that central banks around the world “will and have” to watch the progress and developments concerning digital currencies like Bitcoin and its underlying technology, the blockchain.
Hiroshi Nakaso, a deputy governor of the Bank of Japan was speaking broadly about the financial market’s infrastructure in an age when innovation through financial technology is bringing about changes in payments and settlement systems. The recent speech [PDF] was heard during the ‘Conference on Retail Payments’ in Japan.
Pinning traditional financial infrastructure around centralized ledgers, usually held and operated by banks, he spoke about the “considerable attention” that innovation such as bitcoin and blockchain were garnering in recent times, a technology in stark contrast to traditional banking. In a decentralized manner of managing ledgers, Nakaso added that several international endeavors –including those that exist outside the banking industry – are looking to understand and develop distributed ledger technology.
Notably, he added:
The application of those technologies would also change the structure of the financial infrastructure that has been built around centralized ledgers managed by trusted third parties.
Thus, central banks will and have to follow these issues closely and with great interest.
The deputy governor also touched on the reports that some central banks around the world are contemplating digital currencies of their own, by revealing the stance taken by the Bank of Japan:
The Bank [of Japan] does not have a specific plan to issue digital currencies at this stage, but will deepen its research and analytical activities so as to understand the impact of technological innovations, FinTech and distributed ledger [technologies]…including the possibility of the Bank’s utilizing such advanced technologies in its own operations in the future.
Japan has –despite experiencing the debacle of the now-defunct Mt. Gox exchange – made inroads to granting bitcoin and other digital currencies the same status as fiat currencies. The bills to recognize digital currencies as real money is currently being deliberated at the Upper House of the Duma, Japan’s parliament. The bills have already passed through the Lower House, earlier in April.
Japan is also considering the curbing of its bitcoin tax, a move that is also being sought after by the Australian government which is making progress in removing the ‘double taxation’ of bitcoin.
Featured image from Shutterstock.
