Japan may not have negative interest rates on CBDC.
The Bank of Japan (BoJ) has said that its Central Bank Digital Currency (CBDC), the digital Yen, will not be used to help achieve negative interest rates.
Reuters quoted the BOJ Executive Director Shinichi Uchida’s recent remarks.
“While the idea of using such a functionality as a means to achieve a negative interest rate is sometimes discussed in academia, the Bank will not introduce CBDC on this ground,” Uchida said in a speech.
Negative interest rates are adopted to stimulate spending by consumers in a stagnant economy by encouraging borrowing and spending, with interest being paid to borrowers rather than lenders.
Senior Wall Street Journal columnist James Mackintosh has echoed a similar sentiment. He argued that the difference between a CBDC and cash would manifest when interest rates fall below zero. People would be more likely to hold physical cash than lose money on CBDC issued by the central bank.
The Indian Government and the Reserve Bank of India (RBI) are also working towards the development of a digital rupee. No further details have been shared as of now in the public domain. It remains to be seen whether India will adopt a wholesale or retail CBDC.
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