TOKYO Japan’s new top financial regulator Ryozo Himino voiced caution over taking fresh steps to promote cryptocurrency trading, arguing that doing so may not necessarily promote technical innovation.
Tokyo should instead focus on efforts toward issuing central bank digital currencies (CBDC), as the coronavirus pandemic could speed up the arrival of a cash-less society, he said.
“Deregulating bitcoins and other cryptocurrencies may not necessarily promote technical innovation, if doing so simply increases speculative trading,” said Himino, who spear-headed last year’s G20 debate on regulating cryptocurrencies.
“We’re not thinking of taking special steps to promote cryptocurrencies,” he told Reuters on Wednesday.
Himino became the Financial Services Agency’s new commissioner in July, replacing Toshihide Endo.
Under Japan’s chair, Group of 20 major economies last year agreed to set strict regulations on cryptocurrencies such as Facebook’s Libra, warning that various global risks they could pose must first be addressed.
Himino welcomed the Bank of Japan’s recent efforts to speed up research on CBDCs, saying Tokyo must look more closely at ways to address potential challenges if they were to be issued in the future.
“We shouldn’t be worrying about various challenges without even trying to design a plan (for issuing CBDCs),” he said.
“In the end, Japan must think really hard about whether to issue CBDCs because there are merits and demerits to doing so. What it can do now is to be ready so that when Japan decides to issue CBDCs, it can do so straight away,” he said.
Himino also said there was no “one-size-fits-all” solution for Japan’s struggling regional lenders, which are suffering from a shrinking local population, ultra-low interest rates and the hit from COVID-19.
Regional banks can use government bail-out programmes if they think that would best serve borrowers, though conditions have not deteriorated to such a degree so far, he said.
“At present, there isn’t any regional bank that is facing concerns over its financial health,” Himino said.
“If some of them do face financial challenges, there are various steps they can take such as cutting costs, coming up with ways to boost profits or raising capital from markets,” he said.
The coronavirus pandemic has added to the pain for Japan’s roughly 100 regional banks already reeling from a sluggish economy and years of ultra-low rates that have eroded their profit margins.
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