Japanese policy makers seem baffled by the progress of China’s CBDC initiative.
There seems to be disagreement within the highest levels of the Japanese government about the threat that China’s CBDC poses to the nation. Last week, Kenji Okamura, Japan’s deputy finance minister for international affairs, expressed concern about his neighbour’s efforts in space and said that „the advantage of being the first to act is something I should fear.
Today’s statement by Kazushige Kamiyama, who leads the Bank of Japan’s (BOJ) CBDC efforts, seems to contradict this earlier sentiment. He said that, on the contrary, the advantage of the first move can easily become a disadvantage, and that no single digital currency will dominate:
„I do not believe that a single digital currency will dominate the world, as long as every country makes every effort to improve its settlement system“.
Kamiyama said the BOJ is closely monitoring the progress of other nations in space and hopes to learn from their efforts:
„We would like to be aware of what other central banks are doing and learn from them, not only from China but from other countries.“
He also said that as long as the BOJ issues a CBDC, there is a possibility that the bank will implement limits on the amount issued and the amount of assets that entities could legally hold. He suggested that such restrictions could be implemented to prevent capital flight from commercial banks, and explained that „it is an option. But it is not something we can say will definitely happen.
While the CBDC race around the world is in full swing, policy makers seem to be struggling to find the right approach to what remains a novel idea.