Provisional Translation

Q.

The Bank of Japan has started research jointly with the European Central Bank and other institutions on digital currencies issued by central banks. How should Japan move forward in this field?

A.

There has been a lot of talk about digital currencies, so this isn’t a new topic. There have been various research initiatives already. This doesn’t mean that they plan to issue a digital currency that functions as legal tender. Currently, they need to think carefully about the necessity of that and the impact it would have on the financial system itself. That’s not limited to just the Bank of Japan, but includes many institutions in many places. Look at France for example, where they are making an intense effort. As to why issuing a digital currency has become a topic, it’s certainly because the remittance fees for cash are too high, and the process is troublesome. By comparison, people say a central bank digital currency, or CBDC, would be faster, more convenient, and simpler to use. That’s the background to this current situation. But we have to consider many aspects of the tradeoff between such convenience and credibility. So I believe the Bank of Japan’s intent is to gather people from central banks in several different countries to work together in conducting research on these issues.

Q.

China is expected to issue a digital yuan in the near future. Should Japan move quickly to take countermeasures, and is there anything necessary to prepare for this?

A.

We are still unsure of what China will do, and the opinion is that their actions will only have an impact domestically. As the country has a population of 1.4 billion people, that’s a reasonable capacity. In that case, I think the issuance of a digital yuan is possible. And if their central bank issues it, it will have to be a trustworthy currency, as there would be problems if it were not.