The Deputy Governor of Bank of Japan (BOJ) questioned the capabilities of central banks, stated that it is doubtful whether the central banks will enhance their effectiveness in monetary policies.
Some experts believe that the central banks can overcome the ‘zero lower bound’ by the use of digital currencies. Zero lower bound is a situation where banks leave behind the tools in order to brace economy.
The digital asset allows banks to charge interest on the household deposit results in pushing them to spend money rather than storing it.
Masayoshi Amamiya, Deputy Governor of BOJ, said that if central banks abolish cash from society, then only interest charge on digital currencies can work. Or else in order to avoid paying interest, the public will convert the digital currency into cash.
During a meeting in Japan, he stated that to overcome the zero lower bound on official interest rates there is a need to clear cash from society.
As per the BOJ website, the Governor further added that being a central bank, making society cash free now is not an option because the cash is still widely used in the market. The Bank of Japan has no such plans to furnish digital currencies which can be used for payment purposes.
Regulators across the world have raised their concern regarding the growing presence of crypto-currencies. Crypto assets, because of their liability to change rapidly, are not backed by any central bank
Amamiya said there was a big hurdle for cryptocurrency to overcome currencies which are pegged by central banks as a medium of payment and settlement. It is because the cryptocurrencies are hardly used for day to day settlements and payments and is a target for major trading investment.
While most of the statements are against crypto assets, there are organizations like WTO – World Trade Organization that believe that in the digital assets and their potential to make an impact in the market.