The newest government financial regulator to become aware of the drawbacks attached to the state-issued cryptocurrencies is the bank of Japan. The conventional financial system in developing countries may be threatened by the usage of these virtual currencies, as indicated by Masayoshi Amamiya, the deputy Governor of the Bank of Japan.
He also stated that the central bank is not prepared to issue its own digital currencies.
Impact of state-issued virtual currencies
A significant impact on the current financial system may occur with the introduction of a state-owned virtual currency, amplified by the Deputy Governor of Japan in a Finteh conference as reported by Newsbitoin.com.
He addresses the crowd that the central bank is not currently prepared to establish its owns digital currencies, among the spectators, included a rep from FSA, the Japanese Financial Service Authority, and a rep from IMF the International Monetary Fund.
The deputy Governor made the emphasis that the existence of the central bank was meant to fight “the turmoil caused by multiple payment instruments” as reported by Newsbitoin.com. As a result, they were instructed to give out “central bank money”, he detailed.
Through loans and credits, private banks offer payments to the wider public and proportionate financial resources to the economy as prescribe in the two-tiered modern financial system. This framework “reflects the wisdom of human beings in history to achieve both efficiency and stability”, as indicated by the Deputy Governor and reported by Newsbitcoin.com.
The Deputy Governor stressed his worries that the central bank virtual currencies issuance will give businesses and households “direct access to central bank accounts” as reported by Newsbitcoin.com. He further elaborated that “this may have a large impact on the two-tiered currency system and private banks’ financial intermediation.”
As of now, the central bank permits an uninterrupted link to its account just for the precise amount of organization including private banks, he noted.
The DP of the bank also emphasizes that the bank should loosely monitor contemporary innovation and technological improvements to offer the public with the top financial structure ever available, at the same time. The significance of comprehending innovative technologies not just for sustaining steadiness, but also “for seeking their application in the future” was completely recognized by the BOJ, the Deputy Governor noted.
In conclusion, the statement by the Deputy Governor Japan comes at a time, when an increasing number of central banks and financial authorities across the world are neglecting the issuance of, state-issued digital currencies. Over the past few months, a proposal to circulate these virtual currencies have been established in numerous nations, with or without the existence of blockchain.
With regards to decentralized cryptocurrencies like bitcoin, they have been view as options that would permit financial regulators to utilize this new innovation without the loss of control over the financial structure.