Bloomberg Expert: Japan To Issue National Cryptocurrency
August 8, 2018
In attempts to reach for 2%-inflation via stimulatory monetary policy the Bank of Japan (BOJ) is considering new ways to eliminate economic restrictions that emerged as a result of the country’s deflation. In particular, the regulator explores the option to refuse from cash completely.
Over that last five years the BOJ has increased its monetary credit basis thrice and adopted a new policy aimed at 2%-inflation by the beginning of the next year by introducing negative interest rate for bank deposit. The measures however haven’t produced any significant effect.
For the program to bring expected results Bloomberg expert Andy Mukherjee suggested in his recent article the BOJ issuing its own cryptocurrency.
As Mukherjee claims, side effects from negative interest rates have caused the problem of banknote oversupply. Due to the actions taken by the program of the regulator storing funds at bank accounts has turned to be unprofitable so the country’s citizens began resorting to cash more often.
To save the BOJ’s monetary policy Mukherjee believes that the government of Japan has to consider the idea of introducing digital alternatives to the fiat urgently:
“To rescue it, [Prime Minister] Abe must go beyond private-sector initiatives…What’s required is a public-sector push to replace all physical cash with a national digital currency.”
Moving on, the author describes probable way of using it:
“The BOJ would create new electronic money and give it to the government against a perpetual bond sold by the finance ministry to the monetary authority. The ministry would then credit the electronic money to people’s bank accounts with the proviso that every month that the gift is saved—and not spent—its value will go down by, say, one-twelfth of 1 percent…Thus a part of Japan’s money supply would be effectively under negative interest rates. Higher spending would spur inflation.”
The expert states that the idea stands to win and will help the country to make a step towards society without cash. And although Japan is not in the lead in the fintech industry Mukherjee is convinced the authorities are able to make the idea come true.