According to Bloomberg, Taro Aso, Japan's finance minister, believes that China's central bank's digital currency may pose great risks.
The report said that he warned countries not to use China's digital renminbi, and he believed that any country needs to do a lot of work before issuing central bank digital currencies.
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Taro Aso said at the G20 meeting in Riyadh, Saudi Arabia, "Unless properly regulated, there is a lot of risk in central bank digital currencies. At least for now, I would say 'suspend' the issuance of government-backed digital currencies."
According to the communiqué issued by G20 on Sunday, the risks associated with digital currencies should be assessed and appropriately addressed before issuance. China's central bank digital currency program and Facebook's proposed private Libra stablecoin efforts are pushing central banks around the world to accelerate their understanding of the function and impact of digital currencies.
Aso believes that countries should be aware of the disruption that the global economy may cause if China abandons its digital currency in the future.
The Bank of Japan is currently working with other major central banks to evaluate the development of its own digital currency. Although Japan does not currently have a plan to issue digital currencies, lawmakers are increasingly worried that the digital renminbi being developed by the Chinese authorities may disrupt the stability of the dollar-centric economic order.
"We believe the digital yuan poses a challenge to the existing global reserve currency system and currency hegemony," said Norihiro Nakayama, a senior member of the Japanese ruling party.
The widespread use of digital renminbi may bring more currency transactions, expand its scope of influence, and may weaken the position of the yen.
Japan is still more dependent on cash than most other developed countries, and the Japanese government is trying to change that by offering credit cards or other electronic rebates for shopping. According to a government report released last month, cashless payments in Japan accounted for less than 20% of all transactions in 2016, compared to 65.8% in China.
Image source: Pixabay
By Liang CHE
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