The Bank of Japan has said it aims to accelerate research on digital currencies in cooperation with foreign central banks, amid rapid developments in financial technologies.
Japan’s central bank will study and analyze related technologies and the impacts of digital currencies on the economy while eyeing the possibility of issuing its digital currency in the future. Wider use of digital currencies will enable low-cost and rapid international cash transfers and payments.
But thorough measures to protect personal information are needed because it is easier to track flows of money with digital currencies.
The BOJ, five other central banks, and the Bank for International Settlements said Tuesday that they had created a group to share experiences as they assess the potential cases for central bank use of digital currencies in their home jurisdictions.
The group plans to compile a report by the end of the year. The central banks involved do not plan to issue a common digital currency. The individual banks could decide whether or not to issue their currency.
“At present, we don’t have a concrete plan to issue a digital currency,” a BOJ official said.
But the BOJ will promote research in preparation for the possibility of encountering a need to issue a digital currency.
Behind the central banks’ decision to promote joint research on digital currencies is a sense of caution over the Libra cryptocurrency that Facebook Inc. is planning to issue.
If digital currencies issued by private companies become widely used across the world, measures against money laundering may falter, and the effects of central banks’ monetary policies may be weakened.
There is also a need to study new technologies, such as the blockchains that serve as a platform for digital currencies.
The joint research is also aimed at competing with China. China’s central bank has already unveiled plans to issue a digital currency, which it may try to push as a key international currency.