Libra Stimulated Us To Take CBDCs Seriously: Japanese Banking Veteran

One Japanese banking veteran known for his previous role as the head of payments and settlements at the Bank of Japan (BOJ) recently said that Facebook’s Libra stimulated us to look seriously into digital currency issuance.

According to a report by Reuters published on January 22, Hiromi Yamaoka reportedly oversaw the BOJ’s research into digital currencies as part of his first role. As he said, he continues to communicate with international central bank policymakers. Currently, Yamaoka is a board member at the IT consultancy firm Future Corp.

In the latest cryptocurrencies news today, we also reported that the central banks of Canada, the United Kingdom, Japan, EU, Sweden and Switzerland announced the creation of a group along with the Bank of International Settlements (BIS) to jointly study the concept of central bank digital currencies (CBDC). This is one more proof, according to Yamaoka, that Libra stimulated the markets to study CBDCs even more.

Their initiative is symptomatic of increased competition between the public and the private. As such, it is determining the future of money. Yamaoka also noted:

“The latest decision is not just about sharing information. It’s also an effort to keep something like Libra in check […] Major central banks need to appeal that they, too, are making efforts to make settlement more efficient with better use of digital technology.”

Yamaoka is confident that Libra stimulated the markets and put some pressure on financial institutions to lower the costs of transactions. With this, a lot of fundamental questions about nation states’ control over currency issuance were also raised.

However, the banking veteran and ex-BOJ official was in the Libra news for saying that central banks may stifle private-sector innovation by using CBDCs to enhance the effectiveness of central bank measures. As he noted:

“In the world of central bankers, the idea of using CBDCs to enhance the effect of monetary policy seems to have subsided somewhat. There are increasing doubts about the effect of negative interest rates as a policy tool. If so, do you want to issue CBDCs for the sake of deploying a policy with questionable effects?”

The expert concluded stating that while Libra stimulated us to see CBDCs in a different light, monetary officials need to be sane in wake of the new changes.

“If you want to make monetary policy effective, you need to ensure people keep using the currency you issue,” he concluded.