The governor of the Bank of Japan, Haruhiko Kuroda, recently gave a speech at the Symposium for the 35th Anniversary of the Center for Financial Industry Information Systems, where he discussed the role of stablecoins in the Japanese economy.
Kuroda’s speech, delivered on December 4, was titled ‘Payments Innovations and the Role of Central Banks: Addressing Challenges Posed by Stablecoins’.
During the speech, Kuroda claimed that demand for a ‘digital yen’ central bank digital currency (CBDC) in Japan is low.
Kuroda’s comments come amid growing global focus on CBDCs, with China announcing a yuan CBDC for release next year while the EU is currently exploring a stablecoin to compete with Libra.
On December 2, Coin Rivet reported that researchers from the Bank of Japan had published a report exploring the legal implications of launching a bank-backed digital yen, indicating the country may be exploring a CBDC in the future.
However, Kuroda’s recent comments seem to imply that a national Japanese digital currency is off the table for now.
Instead, Kuroda claimed:
“…it does not seem that there is a demand for a CBDC from the public at present. Nevertheless, the Bank of Japan has been conducting technical and legal research on this matter in order to stand ready when the need for a CBDC may arise in the future.”
Rather than launch a national digital currency, Kuroda advocated for improving the multiple private digital currencies currently in circulation in Japan and bringing them closer to the “expected functions” of a CBDC.
Kuroda also discussed Facebook’s Libra stablecoin project, which has attracted widespread criticism from many financial and political professionals worldwide.
Speaking mostly favourably of the project, Kuroda said:
“Global stablecoins (GSCs), such as Libra, may offer convenient payment services to many users if legal certainty and technical stability are ensured.”
Kuroda cited Facebook’s existing large customer base and its global reach as factors which may contribute to its success, and claimed that these factors set it apart from normal cryptocurrencies.
However, later in his address, Kuroda explained that supervisory and regulatory authorities had to work in international coordination and collaboration to regulate an entity such as Libra, which may try to use its position to “replace banks”.
Koruda concluded his speech by maintaining his position that while stablecoins could improve current payment systems, measures must be taken to ensure that private currencies do not undermine monetary policy.
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