The head of the Japanese central bank’s payments department doesn’t see digital currencies like bitcoin replacing physical cash anytime in the near future.
Speaking at a FinTech forum in Tokyo on Wednesday, Bank of Japan (BOJ) senior official Hiromi Yamaoka revealed he doesn’t see the conventional banking industry under any immediate threat from digital currencies. Yamaoka, who heads the Japanese central bank’s payment and settlement systems department, opined physical cash is here to stay despite major disruptive gains led by financial technologies in recent years.
The central bank official is quoted by Reuters as stating:
It’s too far off…It would change the banking system too drastically.
Yamaoka offered similar remarks last year, when stating digital currencies won’t replace the physical cash printed by central banks – particularly in countries like Japan with an ‘established financial infrastructure.’ Earlier in March this year, the official confirmed the central bank would “seriously consider” the prospect of issuing its own digital currency, an effort undertaken by several counterparts in China, Singapore , Canada and Russia, among several others.
Sticking with his opinions on the cryptocurrency industry, the central bank official claimed the hype surrounding initial coin offerings (ICOs), a hugely popular and radical new form of fundraising powered by cryptocurrencies, was “quite tremendous”.
He went on to add that blockchain technology, the underlying innovation of decentralized cryptocurrencies like bitcoin, aren’t mature enough to power the world’s biggest payment rails. Contrary to the central banker’s remarks, a number of Japanese banks are already testing blockchain-powered domestic fund transfers to replace ‘Zengin’, the current national payments clearing platform that restrictively allows money transfers between 8:30 AM and 3:30 PM in the country.
Despite its stature as one of the world’s leading economies and contrary to the notions of a technology-forward society, Japan is lagging behind China and Korea when it comes to cashless digital payments. The current adoption rate of digital payments in the country is a measly 19%, compared to both China and Korea at over 50%.
As a result, the government of Japan has mandated a FinTech growth strategy to double the adoption rate of digital payments, aiming to hit 40% to pull level with the United States within the next decade. Japan’s embracive stance toward financial technologies has already seen bitcoin recognized as legal tender in the country, following legislation that came into effect in April. Furthermore, Japan’s financial regulator recently granted regulatory licenses to 11 bitcoin exchanges to operate in the country.
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