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A CBDC can threaten financial stability and be disastrous for the economy. Hiromi Yamaoka, ex-head of digital yen research at the Bank of Japan, said this, writes The Japan Times.
Yamaoka’s biggest concern is negative interest rates, which could put a burden on the public if CBDC becomes a popular payment instrument.
“Some say that negative interest rates could work more effectively with digital currency, but I don’t think so”he commented.
Yamaoka doubted that such a monetary policy move would encourage households to increase spending in an effort to cushion the decline in the purchasing power of savings. A weaker yen could be a side effect, the ex-official added.
At the moment, the former head of the financial settlements department of the Central Bank leads the private sector digital currency forum. It involves 74 companies and organizations, including the country’s largest banks. The association plans to issue a digital currency for settlements between participants in the new financial year starting in April.
Recall that in April 2021, the Bank of Japan launched the first of three phases of CBDC testing, which will last until March 2022. In the second, the regulator will focus on the technical aspects of issuing the digital yen.
In July, a spokesman for the ruling Liberal Democratic Party, Hideki Murai, said the state would develop a more detailed draft of the CBDC by the end of 2022.
Earlier, the head of the Bank of Japan, Haruhiko Kuroda, said that the regulator would decide on the launch of a digital yen by 2026.
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