The Deputy Governor of the Bank of Japan’s Masayoshi Amamiya said Saturday that the Central Bank of Japan sees no possibility to raise the efficiency of its monetary policy by issuing digital currency.
Japanese academics had previously stated that the Central Bank can overcome the “zero lower bound” on interest rates — a situation in which disappear the tools to stimulate the economy and interest rates fall to zero by issuing the national currency.
In theory, a digital currency would allow the Central Bank to avoid side effects policy of negative interest rates, reflected in surplus cash notes, thereby motivating people to spend cash rather than save them.
Amamiya is against this idea, saying that charging interest on digital currency will be relevant only in the case if the Central Bank completely eliminate cash from circulation. Otherwise, in his opinion, citizens will simply convert a digital currency into cash to avoid paying interest.
“In order for the Central Bank to overcome the zero lower bound on nominal interest rates, we need to entirely get rid of cash”, — said the Deputy Governor of the Bank of Japan. “In our case this is not possible, as cash is still widely used in Japan.”
Amamiya noted that the Bank of Japan plans to issue a national digital currency.
We will remind, in August, Japan considered the possibility of rejection of cash in favor of a national cryptocurrency in order to save the new monetary policy the Bank of Japan.