Haruhiko Kuroda, the Governor of the Bank of Japan, has expressed his belief that a central bank’s digital currency (CBDC) should work in tandem with other payment methods to enhance Japan’s financial ecosystem.
According to Kuroda, government-backed stablecoins can increase payment convenience for users, while CBDCs are essential in promoting financial inclusion and expediting international transactions.
Although stablecoins, cash, bank deposits, and digital currencies are competing for supremacy, Kuroda believes that leveraging the strengths of all payment instruments is crucial for enhancing the stability and security of Japan’s payment system.
Kuroda stressed that “when a central bank digital currency is seamlessly convertible to and from other forms of money, it ensures uniformity. In other words, balance is maintained when one yen equals one yen, regardless of the payment instrument.”
In 2020, the Bank of Japan partnered with several private firms to test the digital yen, which will rely heavily on previous proof-of-concept (PoC) testing and won’t become fully centralized.
Recently, the Bank of Japan announced that it would be piloting its digital currency this April.
Kuroda had expressed different views regarding government-backed cryptocurrencies a few years ago, citing low demand for the Central Bank’s digital currency in the country and the risks associated with it.
Nevertheless, the current stance taken by the Bank of Japan indicates a growing recognition of the potential benefits that CBDCs could bring to Japan’s financial landscape, especially if used in conjunction with other payment methods.