Japan should review the law stipulating the mandate and responsibilities of the Central Bank of Japan (BOJ) if it issued central bank digital currencies (CBDC), a senior official from the ruling party told Reuters news agency today.
Any revision of the BOJ law would be a good opportunity to consider making other changes to the central bank’s mandate, said Kozo Yamamoto, head of the Liberal Democratic Party’s financial affairs council.
“Like the US Federal Reserve, the BOJ should establish job creation and inflation as its mandate … The new law should also clarify that 2% inflation is the BOJ’s policy objective,” he told Reuters .
It is worth noting that Yakamoto’s remarks came three days after the Bank of Japan announced its plans to conduct a proof of concept for the digital yen in 2021.
Prior to this announcement, the BoJ had not been so quick on the proposal. In February this year, he said that a digital yen project would probably see the light of day in two or three years and not before that. The one who gave those statements was precisely Yamamoto.
In September this year, Tetsuya Inoue, a former BoJ official and now a principal investigator at the Nomura Research Institute, had emphatically said that it was time for Japan to get serious about the digital yen.
According to many insiders, the main reason for the current momentum and acceleration is related to the speed that China is printing to its digital yuan. In fact, last week the Central Bank of China and the Shenzhen region gave the equivalent of USD $ 1.5 million in digital yuan to the population for testing.
in 2019, the government took initiatives to promote cashless payments across the country by offering rewards as incentives, and earlier this year, Japan established a digital currency group to investigate a possible CBDC.
In the words of Inoue, Japan should not ignore the growing global interest in digital currencies, because the technology that would support such a currency would also support financial services that use digital currency as infrastructure, creating network externalities (the increase in demand for a product or service as more people start using it).
Once the entire system with sources from another country has a monopoly status, it is difficult to replace it, Inoue said. This fact plays an important role in the battle for the hegemony of the main countries.
Inoue added in the interview that “although Japan could still hold its yen, if another country establishes a strong digital financial ecosystem, Japan will have to depend on it to process domestic payments safely and efficiently, undermining the competitiveness of its own financial services. ”.
When asked about concerns about the use of personal data, Inoue said there would have to be a trade-off: If people provide their information in exchange for more convenience and service, then the profit should be calculated accordingly.
By: Jenson Nuñez