Bank of Japan is alarmed about the use of crypto for cross border transactions.
The Bank of Japan (BOJ) Head of Payment and Settlement Systems Department, Kazushige Kamiyama believes that crypto can upend the global settlement system as they make it easier to circumvent conventional payment means using sovereign currencies.
“By using stablecoins, it’s not very difficult to create an individual global settlement system,” Kamiyama told Reuters in an interview.
The G7 countries should act fast to lay down a common framework for regulating digital currencies. Current rules do not take into account the growing presence of digital currencies, he said.
“G7 nations are now working together on this front, while sharing information on current developments,” said Kamiyama, who is involved in G7 discussions on digital currencies.
Cryptocurrencies can be transferred seamlessly across the border without much hassle as compared to legal tenders which can take a lot more time.
This also puts forth the dilemma of balancing privacy with money-laundering on the design of a digital yen, said Kamiyama, whose department is charged with the BOJ’s experiments on issuing a Central Bank Digital Currency (CBDC).
It may have been in light due to the Russia-Ukraine conflict where Russia has been heavily sanctioned and expelled from SWIFT. Consequently, Russia may resort to using crypto, especially stablecoins for international payments.
While BOJ Governor Haruhiko Kuroda has revealed that a decision on whether to issue CBDC may come by 2026, Kamiyama said the timing will depend partly on how quickly other central banks move.
“Given how so many advanced nation central banks are moving collectively, dramatically and simultaneously on CBDC, it could cause big changes in the settlement system in the future,” he said. “Japan needs to make sure it’s not left behind.”
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