Blockchain Could Expand Central Bank Access, Says Bank of Japan

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Central banks could allow access to accounts around the clock if they used blockchains or cryptocurrencies, a senior Bank of Japan official speculated last week.

Speaking during a finance forum on 21st April, deputy governor Hiroshi Nakaso touched on the subject of so-called central bank digital currencies, or CBDCs, and their potential impact on how people interact with their accounts at a given time.

One proposal is to offer central bank accounts to retail customers through a CBDC (something that officials at the Bank of England have highlighted in the past). In his speech, Nakaso brought up this idea, suggesting that, depending on the degree of adoption, such an arrangement could give accountholders continuous access to funds.

Nakaso remarked:

“In an extreme case in which CBDC provides the same functionality as banknotes as an alternate measure, it could enable everyone to access central bank accounts 24/7, year-round. Some overseas central banks have started to consider the rationale for or to conduct researches and analyses on CBDC.”

Many central banks today are testing the concept of a legal tender issued in a wholly digital medium.

In the past month, Hong Kong’s de-facto central bank moved to begin testing a CBDC, and in March, authorities in Singapore completed a similar trial. Central banks in Canada, China, Sweden and the UK, among others, also have projects in various states of development.

The Bank of Japan itself has been trialing the tech, noting in statements in December that it was “test driving” the concept ahead of any possible applications. Late last year, for example, the Bank of Japan inked a deal with the European Central Bank to collaboratively research blockchain.

Still, the Bank of Japan has been largely mum on the work’s potential impact, choosing to emphasize its early and experimental nature.

Image via Shutterstock

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