Japan’s Central Bank Released Report about Central Bank’s Cryptocurrencies
With the advent and development of Blockchain technology and a variety of cryptocurrencies in recent years, many experts are engaged in discussion and exchanging opinions about central banks’ launching cryptocurrencies. Recently, Japan’s central bank evaluated the role of central bank digital currency (CBDC) in the current monetary system. This report was published on February 19 and has examined various topics in this field such as potential impacts of central bank digital currency on payment productivity, liquidity crisis, and mechanism of monetary policies. As it was mentioned in this report, Japan’s central bank has no plan to replace cryptocurrency with the common currency of this country in the near future. This report divides potential CBCDs into two categories. The first category includes those that are available to people like money bills; the second is those that are limited for large payments. This categorization took place in March of last year according to the report by BIS (Bank for International Settlements) financial institute.
In a part of this report, the use of cryptocurrencies in money laundering and crimes is discussed. As it was pointed to in this report, a money bill only shows its own value information and provides no information as to who owns it. And so, money bills are easily used for money laundering, tax evasion, and criminal activities. However, CBDC can reduce this anonymity and be a good alternative for high-value transactions; for instance, the People’s Bank of China announced on January 20, 2016, that it has a plan to release CBDC in the future, it also pointed out in this announcement that avoiding tax evasion is another advantage of launching CBDC in this plan.
It needs to be mentioned that, while this report is published, the director of Japan’s central bank, Masayoshi Amamiya, had expressed his negative opinion regarding the release of cryptocurrency by the central bank. According to Masayoshi Amamiya, the cryptocurrency released by the central bank is not an effective financial tool. According to experts, CBDC can be used as a means of control, when the interest rate is reduced to zero. In fact, the interest rate of deposits can be increased by CBDC, so that society would spend more money. However, Masayoshi Amamiya questioned this attitude and said that the success of CBDC depends on the country’s common currency.