Bank of Japan calls for more scrutiny in issuing digital currency

Furthermore, they need to look at ways to mitigate any associated perils. By issuing their own digital currencies, central banks can act as a bridge for private sector money flows and streamline settlement. All the same, such a practice could also stifle private-sector financial innovation and draw money away from deposits at commercial banks if they succeed in issuing low-cost digital currencies, according to Reuters.

Some emerging economies are looking seriously at issuing central bank digital currencies (CBDC) because of the need to counter money laundering or to deal with a lack of resilient financial infrastructure. However, Japan and many other advanced economies do not face such problems that require them to immediately issue CBDCs, the Governor added.

Still, the BOJ will set up a team within the bank looking into CBDCs and work closely with its overseas counterparts on the topic.

So far, the central banks of Britain, the euro zone, Japan, Canada, Sweden and Switzerland, in January 2020, announced a plan to share experiences to look at the case for issuing digital currencies, amid a growing debate over the future of money.