An official for Japan’s central bank said the country needs to be ready in the event that demand for a “digital yen” increases. 

According to a report by Reuters on Thursday, Masayoshi Amamiya told attendees at a Tokyo seminar that advancements in technology could drive further demand for central bank-backed digital currencies. 

Amamiya called it “very important” for the Bank of Japan to explore the technology of digital currencies, despite having no immediate plans to issue a sovereign coin. 

He said, 

The speed of technical innovation is very fast. Depending on how things unfold in the world of settlement systems, public demand for CBDCs could soar in Japan.

He continued, 

We must be prepared to respond if that happens.

Amamiya said it was unlikely for monetary policy affecting interest rates and bank lending to change in the event of digital currencies gaining popularity. However, he said it was “worth looking into” whether central banks could more easily impose negative interest rates with a fully digital system.

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