Bank of Japan: Central Bank-issued digital currencies are not an effective tool for monetary policies

On Saturday, Bank of Japan's Deputy Governor, Masayoshi Amamiya, questioned the effectiveness of issuing digital currencies as a monetary tool for central banks. Some academics believe that central bank-issued digital currencies could overcome the zero bound problem, in which a central bank has lowered its short-term interest rates to zero and must implement new methods of economic stimulus. In theory, by issuing digital currencies, central banks could easily charge interest on deposits of households and firms. However, according to Amamiya, charging interest on digital currencies would only work if central banks eliminate cash from society, but "getting rid of cash now is not an option for us as a central bank,” because cash is still widely used in Japan. (Source: Reuters)