The Bank of Japan’s (BOJ) deputy governor Masayoshi Amamiya has recently reiterated his negative stance towards central bank-issued digital currencies (CBDC), the New York Times reports Oct. 20.
Speaking on Saturday at a meeting in Nagoya, central Japan, Amamiya expressed doubts about the use of CBDCs, claiming that such digital currencies are unlikely to improve the existing monetary systems. Amamiya also stated that the BOJ does not plan to issue digital currencies.
The article reports that some financial experts consider a CBDC as a tool for central banks to control the economy once interest rates fall to zero. According to this theory, a CBDC would enable central banks to stimulate the economy by charging more interest on deposits from individuals and firms, which would in turn induce them to spend more money.
Amamiya has questioned that theory, claiming that charging interest on central banks-issued currencies would only work if central banks eliminate fiat money from the financial system. Otherwise, the public will still continue converting digital currencies into cash in order to avoid paying interest: