Japan will not launch its own digital currency within the next few months. At least that is what Hiromi Yamaoka, a former Bank of Japan (BOJ) executive, thinks. Yamaoka told Reuters that Japan will likely need "several years" before it can issue its own digital currency.
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The former BOJ executive says difficulties with the launch are tied to the need for measures that would prevent huge outflows from financial institution deposits. Yamaoka says sudden cash outflows could be potentially stopped with a limit on the amount of central bank digital currency (CBDC) a single person can hold.
At the same time, however, imposing limits on CBDCs could enhance the value of digital currencies, and lead to fluctuations in conversion rates for CBDCs to other forms of money.
"The fundamental question, and a very tricky one, is how to ensure private deposits and a CBDC co-exist. You do not want money rushing out of private deposits. On the other hand, there is no point issuing a CBDC if it is not used widely," Yamaoka emphasized.
A senior BOJ official previously said that Japan has no plans on the issuance of a CBDC until public support. Kazushige Kamiyama, the BOJ's payments and settlement department head, says that the watchdog is in no rush as "there is no way we can proceed without gaining sufficient understanding from the Japanese public."
Nonetheless, the watchdog might consider the need for a pilot program if necessary.
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