Kazushige Kamiyama, lead of the Bank of Japan’s central bank digital currency (CBDC) initiative, has said no single central bank-backed digital currency will dominate global finance, in the latest comments from policymakers in Japan on CBDCs.
The comments come a week after junior finance minister Kenji Okamura expressed concerns about the advanced development of China’s CBDC, after suggesting their “first mover advantage” could see Japan and other nations trailing the digital yuan.
Responding to these concerns, Kamiyama said that first mover could actually become a disadvantage, and that the likely outcome would be no single dominant global digital currency.
“I don’t think a single digital currency will dominate the world, as long as each country makes full efforts to improve its settlement system.”
Kamiyama said that the Japanese central bank was closely monitoring regional and global counterparts in their progress on CBDCs, with a view to learning from their projects to inform their own.
“We’d like to keep tabs on what other central banks are doing and learn from them, not just from China but from other countries.”
Speaking on the Bank of Japan’s plans, Kamiyama said that if the bank was to issue a digital currency in the future, it would likely be capped in quantity, with limits on the amount of digital currency individual institutions would be allowed to hold in reserve, measures designed to prevent capital flight from Japan’s commercial banking sector.
The comments come at a time of increasing competition between global central banks, with the likes of the Bank of Japan among those considering CBDCs globally.
Still a novel technology, policymakers in government and central banking are still grappling with the optimum policy approach, with special regard to the existing fiat financial and monetary systems.
With major central banks around the world competing to launch their CBDCs first, it remains to be seen whether and when China will emerge ahead of the field.