Bank of Japan ruled out the choice of using bank-issued cryptocurrencies, because of the fear it might cause to abandon physical cash.
Deputy governor Masayoshi Amamiya of the Japanese Central Bank, lately shared his thoughts about banks adopting digital currencies. He cited that banks might have negative interest rate policies effect by issuing their own digital currencies. If the Bank of Japan issues a digital Yen and sets a negative interest rate, businesses and individuals would effectively be charged for holding the bank issued digital currency as Amamiya explained.
“To overcome the nominal zero lower bound, central banks would need to eliminate cash. Eliminating cash would make settlement infrastructure inconvenient for the public, so no central bank would do this,” cited Masayoshi Anamiya.
even a 12 months later, Masayoshi Amamiya stands nevertheless, for his beforehand April 2018 claims that the Bank of Japan will no longer issue a digital currency. A few of the motives being that it may want to undermine the present two-tiered system and affect financial stability.
Moreover, presently, Central Banks have only given access to private banks. These banks face clients directly in the 2nd tier and by launching a cryptocurrency which would be backed by a central bank could change the system without proving to be financially stable, argues Anamiya.
A short time ago we reported that Goldman Sachs CEO, David Solomon, published that the company is searching into advancing its very own cryptocurrency, like JPMorgan Chase. Also, the company is researching asset tokenization and stablecoins as such.
JPM Chase has made a ideal instance of what these bank issued crypto coins can do and how can banks and, more importantly, bank customers, benefit from this new technology. Instead of attempting to fight the new technology, banks should embrace it and try to implement it, because the last 10 years, presumably have shown that this tech is here to stay. It will get prosper and it will change more and more, but the first layer, the overall idea will stay the same.
The money becomes much more traceable and transparent that is why the world should drop physical cash. Whether it is through crypto or fiat. Blockchain can combine both.