The Bank of Japan (BOJ) will not be issuing a digital currencyintending to achievea negative interest rate, a senior BOJ official announced, in the most explicit denial yet of an idea often floated by academics and analysts.
Shinichi Uchida, Executive Director of BOJ in charge of the bank’s experiments for digital money, said the bank would not introduce a Central bank Digital Currency (CBDC). He added that it was unlikely the general public would support such a motivation. Uchida also said such remuneration functionality would be operationally impractical while traditional cash still exists.
Uchida’s remarks, a key architect of BOJ’s monetary policy, are likely to douse any speculation that the central bank may use digital currency to boost the impact of its negative interest rates for a distant, steady inflation target.
Japan’s central bank began the second phase of its proof of concept studies for digital currency earlier in April 2022. It plans to study features to set limits on the number of transactions and holdings of digital assets as safeguards against an unpredictable shift of deposits away from banks, Shinichi Uchida said, in line with similar decisions by other major central banks globally, including the European Central Bank.
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