Hiromi Yamaoka, the former head of the payment and settlement system department of the Bank of Japan, said that it may take years for Japan to issue central bank digital currencies.
Yamaoka explained in an interview with Reuters on November 17 that the Bank of Japan is concerned that the digital central bank currency may cause a large outflow of private bank deposits.
Yamaoka is now leading a group of banks who want to build a common digital payment settlement infrastructure. He argued: “If it is not widely used, it makes no sense to issue central bank digital currencies,” he said:
“The fundamental issue is a very complex issue, and that is how to ensure the existence of private deposits and central bank digital currencies. You don’t want money to flow out of private deposits. On the other hand, issuing private deposits is meaningless. Central bank digital currencies If not widely used).”
Yamaoka said that in order to mitigate the risk of private deposit flows promoted by CBDC, the Bank of Japan may consider restricting the holding of shares in CBDC by a single entity. However, he pointed out that such restrictions may also lead to fluctuations in the transfer of digital currencies from the central bank to other forms of currency, which will ultimately make payment and settlement methods less favorable.
Yamaoka also stated that the Bank of Japan and the private sector are working together to make digital settlement more convenient. He emphasized that the private sector can play a “primary role” in making the various settlement platforms interoperable.
Soon after the Bank of Japan published a report on the central bank’s digital currency, Yamaoka made a comment. The Bank of Japan announced plans to run the first digital pilot program for the yen in 2021. Japan said that it does not care about China and other countries, and they have gained first-mover advantage in the development of CBDC. Okamura said: “I think no digital currency can rule the world.”