Bank of Japan Deputy Governor Ryozo Himino on Saturday called for a comprehensive, or "holistic approach," when shaping the architecture of the global monetary system, saying decisions should not be limited to central bank digital currencies or stablecoins.
Himino contrasted current international paths: the United States, which he said prohibits the issuance of CBDCs and promotes stablecoins to bolster the dollar's global role, and Europe, which is advancing a digital euro to reduce fragmentation in retail payment systems. "Japan is prepared for both paths," he said, noting the country has moved forward on stablecoin legislation while also advancing a pilot programme for a CBDC.
He argued that developments overseas point to the need for a design that balances multiple considerations - including technical feasibility, social costs, user convenience, financial stability and monetary policy. "Options for the future monetary system are not limited to CBDCs and stablecoins," Himino said in a speech at the annual meeting of the Japan Society for Monetary Economics.
Beyond CBDCs and stablecoins, Himino listed other possible approaches, such as introducing tokenised bank deposits and central bank reserves that operate on blockchain platforms. He said the BOJ has started a "sandbox project" to examine the technical feasibility of tokenising its reserves and using them within blockchain-based payment solutions.
Himino described how the BOJ currently conducts interbank settlement, liquidity provision and the implementation of monetary policy through commercial banks' reserve accounts held at the central bank. He said that applying blockchain technology to settle those reserves could enable instant settlement around the clock and help reduce the risk of gridlock during periods of stress.
The BOJ began experiments for issuing a CBDC in 2021. While no decision has been made on whether to issue such a currency, the bank launched a pilot programme in 2023 for a retail CBDC that would be distributed via private banks or payment firms. Japan's government has also backed a project by major domestic banks to issue stablecoins that will be tested for cross-border payments.
Context and implications
Himino's remarks underline Japan's dual-track stance - regulatory readiness for stablecoins alongside experimental work on a retail CBDC - and the BOJ's interest in exploring blockchain's role in core central bank functions. The call for a holistic framework reflects the need to weigh varied technical and policy trade-offs when considering new forms of digital money.