CBDCs Could Damage the Economy, says Ex-Bank of Japan Official

While most countries are looking for ways to make the most of blockchain technology by adopting policies for the benefit of citizens, some people continue to remain skeptical about it. The most recent addition to the latter group is a former Bank of Japan employee.

CBDC – Not a Good Idea

Hiromi Yamaoka, the former head of Bank of Japans financial settlement department, recently expressed his opinion on the use of digital currencies better known as Central Bank Digital Currencies (CBDCs) in the financial sector.

According to Yamaoka, issuing CBDCs as a monetary policy could end up severely damaging the economy.

Although he did seem to agree with the fact that Japan needs to change the way its payment systems work by adopting digital currencies for it, he did not agree with the Central Banks idea of using a digital yen for it.

As reported by The Japan Times, the application of interest rates will be a key part of the ongoing research into CBDCs by the Bank of Japan. On this point Yamaoka stated:

“Some say that negative interest rates could work more effectively with a digital currency, but I dont think so”

He further said that he isnt sure what benefit applying negative rates to CBDCs will bring to the economy. Instead, according to him, households and businesses would find it rather difficult to escape the influence of negative rates.

On the Other Hand…

Japan is trying its best to keep up with the CBDC race it has going on with China.

Recently during a parliamentary session in Japan, the governor of the Bank of Japan iterated that the country should collaborate with fellow CBDC enthusiast countries to establish a global standard considering the technical aspects of digital currencies.

While the country is yet, to begin with, its second phase of the experiment, governor Haruhiko Kuroda believes that a decision on the issuance of CBDCs could be made by 2026.

Furthermore, Japan has been substantially crypto positive with the country allowing its citizens to both own and use cryptocurrencies for payments in the country.