[2017-11-23] Cryptocurrencies “Too Far Off” to Kill Physical Cash: Bank of Japan

[FollowSynergy]

The head of the Japanese central bank’s payments department doesn’t see digital currencies like bitcoin replacing physical cash anytime in the near future.

Speaking at a FinTech forum in Tokyo on Wednesday, Bank of Japan (BOJ) senior official Hiromi Yamaoka revealed he doesn’t see the conventional banking industry under any immediate threat from digital currencies. Yamaoka, who heads the Japanese central bank’s payment and settlement systems department, opined physical cash is here to stay despite major disruptive gains led by financial technologies in recent years.

The central bank official is quoted by Reuters as stating:

    "It’s too far off…It would change the banking system too drastically."

Yamaoka offered similar remarks last year, when stating digital currencies won’t replace the physical cash printed by central banks – particularly in countries like Japan with an ‘established financial infrastructure.’ Earlier in March this year, the official confirmed the central bank would “seriously consider” the prospect of issuing its own digital currency, an effort undertaken by several counterparts in China, Singapore, Canada and Russia, among several others.

ICOs: “Tremendous” Hype

Sticking with his opinions on the cryptocurrency industry, the central bank official claimed the hype surrounding initial coin offerings (ICOs), a hugely popular and radical new form of fundraising powered by cryptocurrencies, was “quite tremendous”.

He went on to add that blockchain technology, the underlying innovation of decentralized cryptocurrencies like bitcoin, aren’t mature enough to power the world’s biggest payment rails. Contrary to the central banker’s remarks, a number of Japanese banks are already testing blockchain-powered domestic fund transfers to replace ‘Zengin’, the current national payments clearing platform that restrictively allows money transfers between 8:30 AM and 3:30 PM in the country.

Despite its stature as one of the world’s leading economies and contrary to the notions of a technology-forward society, Japan is lagging behind China and Korea when it comes to cashless digital payments. The current adoption rate of digital payments in the country is a measly 19%, compared to both China and Korea at over 50%.

As a result, the government of Japan has mandated a FinTech growth strategy to double the adoption rate of digital payments, aiming to hit 40% to pull level with the United States within the next decade. Japan’s embracive stance toward financial technologies has already seen bitcoin recognized as legal tender in the country, following legislation that came into effect in April. Furthermore, Japan’s financial regulator recently granted regulatory licenses to 11 bitcoin exchanges to operate in the country.

https://www.cryptocoinsnews.com/cryptocurrencies-far-off-kill-physical-cash-bank-japan-official/

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[Lancusters]

This opinion really deserves attention. A very reasonable analysis. Rarely I can say about it. The majority of people who give their comments on bitcoin talking about. Bitcoin can never replace Fiat, but it can create a kind of safety cushion against various crisis phenomena in the economy. Fiat and bitcoin will always exist in parallel.

[partysumo]

I think it is sound analysis.It is impossible for bitcoin to replace cash in the short run (if at all), but it is nice to see that bitcoin is at least acknowledged.

[1Referee]

The point of crypto isn't to kill cash, or to replace it. It never was, and never will be. It's nothing more than an alternative for those who like to hold something they really own, avoid seeing their wealth lose purchasing power year after year, and avoid having to deal with this on debt based system, etc. Physical cash will however lose a significant part of its market share throughout the years, and that has already been happening, but that's not really something caused by crypto currencies. Digital payment infrastructure in most developed economies is top notch, where people get convenience, usability, and security all at once. In other words, people will have only have less incentive to use physical money.

[bambazamba]

To be honest , even if i am great supporter of bitcoin the outlook of Bank of Japan is pretty fair and accurate .
Bitcoin truely is far off from taking the place of fiat or physical cash . Actually , bitcoin was never made or incepted in order to replace physical cash . It was just made for introducing world to digital currency an alternative way of using your funds .
Obviously , Physical cash is way too convenient to many of us ( including me ) and we eventually end up converting our bitcoin into fiat since not many people take payments in bitcoin . So it is a long journey for bitcoin to get maximum acceptance and utilization of bitcoin by common people across the world.                                                                                       

[J. Cooper]

   "It’s too far off…It would change the banking system too drastically."

I find this quote rather vague. Right now bitcoin is off in the sense that it's not ready (yet) for major adoption and as a means of payment for micro transactions. It's still way to ineffective when it comes to afforable micro transactions. But Satoshi never openly said bitcoin would overtake cash issued by governments, that was a creation by the users. And bitcoin doesn't have to, but that doesn't me it can't (provided we can come up and succesfully implement updates like Lightning Network that would allow for afforable micro transactions to occur practically instantaneously).

The point of crypto isn't to kill cash, or to replace it. It never was, and never will be. It's nothing more than an alternative for those who like to hold something they really own, avoid seeing their wealth lose purchasing power year after year, and avoid having to deal with this on debt based system, etc. Physical cash will however lose a significant part of its market share throughout the years, and that has already been happening, but that's not really something caused by crypto currencies. Digital payment infrastructure in most developed economies is top notch, where people get convenience, usability, and security all at once. In other words, people will have only have less incentive to use physical money.

Correct. This is what I said earlier. I don't confidently say it never will, time will tell.