MNI POLICY: BOJ Kuroda: Must Study Impact of CBDCs on Fin Mkts

     TOKYO (MNI) - Bank of Japan must study the impact of central bank digital

currencies on financial markets, Governor Haruhiko Kuroda said Wednesday.

     "Should central banks issue digital money, central bank digital currencies

(CBDCs)? To date, many central banks around the world have already engaged in

research activities," Kuroda said at the Symposium for the 35th Anniversary of

the Center for Financial Industry Information Systems in Tokyo.

     He said, "In some European countries, central banks have been encouraged to

accelerate work on issues surrounding possible public digital currency solutions

in order to counter private sector initiatives."

     "In Japan, the amount of cash outstanding is still increasing, and it does

not seem that there is a demand for CBDC from the public at present," Kuroda

noted.

     "Nevertheless, the Bank of Japan has been conducting technical and legal

research on this matter in order to stand ready when the need for CBDC may arise

in the future. The Bank also needs to study the impact of CBDCs on financial

intermediation," he added.

     "While GSCs have the potential to improve payment services, their

widespread use and the increase in GSC-denominated transactions could undermine

the effects of monetary policy transmission and financial system stability,"

Kuroda noted. 

     "Therefore, the public authorities, as providers of a public good, need to

not only support private sector innovations but also promote the use of digital

money denominated in a fiat currency in their jurisdictions," Kuroda said.

     He added, "Currently, there is a wide variety of private digital money

denominated in Japanese yen. It is very important to promote the use of such

private money by improving its functions to bring."

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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