Bank of Japan & European Central Bank Dead-Set on Pushing Asset Prices Higher

Bank of Japan & European Central Bank Dead-Set on Pushing Asset Prices Higher

Deeper negative rates for the BOJ while ECB President Christine Lagarde wants to keep fiscal spending this year and into 2022.

European Central President Christine Lagarde said on Wednesday that eurozone states must keep fiscal spending well into 2022 to protect the bloc from permanent damage caused by the COVID-19 pandemic.

Lagarde called on EU leaders to further kick start the $750 billion euro Next Generation EU spending package in an online interview.

These remarks are in line with her pledge for monetary support for the economy earlier this week when she said the recovery is to be supported by

“favorable financing conditions, expansionary fiscal policies and a recovery in demand.”

“It remains crucial that monetary and fiscal policy continue to work hand in hand. Fiscal policy -– both at the national and at the European level -– remains crucial to bolster the recovery,” she told European Parliament lawmakers on Monday.

Meanwhile, another central bank, the Bank of Japan, is considering signaling to take interest rates further into negative territory; short-term rates are currently at -0.1% and 10-year bond yields around zero. The Japan Times, citing sources familiar with the matter reported,

“In a monetary policy review in March, the central bank may make it clear that it will maintain its negative interest rate policy and that it will not hesitate to cut rates further if necessary.”

However, markets see deeper negative rates as an unlikely policy option that is already putting a strain on commercial banks’ profits. Moreover, there is no consensus within the BOJ on the final decision either.

The BOJ plans to announce its tools next month, with BOJ Deputy Governor Masazumi Wakatabe saying last week that they must

“maintain (their) commitment to achieve 2% inflation. Based on the commitment, we’ll be ready to lower nominal rates as needed.”

Governor Haruhiko Kuroda has consistently said that if the BOJ were to ease further, deepening negative rates would be among the options.

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Author: AnTy

Japan Joins the CBDC Race With A ‘Digital Yen’ Trial; 30 Major Firms Will Start Experiments In 2021

While China has already successfully run the pilot test of its digital yuan, now Japan is getting ready to do the same.

In its attempt to catch up, Japan’s 30 major firms will begin experiments of issuing a private digital currency next year, said the group’s organizing body on Thursday, reported Reuters.

The group consists of the three largest banks in the country, along with retailers, utilities, brokerages, and telecommunication firms. Using a common settlement platform, the group will conduct the experiments for issuing a digital currency. Hiromi Yamaoka, a former BOJ executive in an online briefing, said,

“Japan has many digital platforms, none of which are big enough to beat cash payments.”

“We don’t want to create another silo-type platform. What we want to do is to create a framework that can make various platforms mutually compatible.”

Recently, the Bank of Japan announced its plan to experiment with issuing a digital yen in a country where cashless payments make up only 20% of total settlement than China’s 70% and the United States’ 45%.

Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, and Mizuho Financial Group — the megabanks of Japan have already rolled out their own digital payment systems.

Yamaoka said while private banks will be in charge of issuing the digital currency in the experiments, other entities’ prospects also issuing a digital yen won’t be ruled out.

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Author: AnTy

Ripple Shortlists A Move to Asia and Europe Should it Leave the US

Ripple Labs considers Japan, Singapore, Switzerland, UAE, and the UK as possible jurisdictions should the blockchain patent services company leave the US amidst a lack of regulatory clarity, said Ripple CEO, Brad Garlinghouse. In an interview with Bloomberg, he said,

“The common denominator between all of them is that their governments have created a clarity about how they would regulate different digital assets, different cryptocurrencies.”

When it comes to the US, authorities here are unclear on the status of cryptocurrencies, said Garlinghouse adding that there are different opinions on whether crypto is a currency, commodity, property, or security. “Regulation shouldn’t be a guessing game,” he said.

“Ripple is definitely a proud U.S. company, and we’d like to stay in the U.S. if that was possible, but we also need regulatory clarity in order for us to invest and grow the business.”

In “contrast” to the US, Garlinghouse said Japan had created an “environment for a very healthy market to develop.”

The country has already introduced a registration system for crypto exchanges about three years back. Moreover, Ripple has close ties with Japanese financial conglomerate SBI Holdings, and its CEO Yoshikata Kitao also sits on Ripple’s board since last year.

“Japan is one of our fastest-growing markets, in part because we have key partners like SBI,” he said. “I have spoken to the SBI team about the fact we are looking at” Japan as a potential destination, Garlinghouse said.

Ripple has been thinking of a move for some time now; in another of his interviews, Garlinghouse has said that China is already decades ahead in the digital currency sector.

In terms of a central bank digital currency, China has moved further ahead in its digital currency trial as it distributed 200 digital yuan to 50,000 people spendable at 3,000 retail outlets. Other central banks, including the Federal Reserve, meanwhile are still in the research phase.

The playing field won’t level until a country established a lead in “the internet of value,” he said.

The pandemic raised the interest in digital currencies and not just for CBDC. According to Garlinghouse, the coronavirus pandemic has given a “tailwind” to crypto markets because of all the money printing central banks have been doing.

While the monetary stimulus, which is “inflationary on some level,” drives the demand for crypto, a move away from cash is also helping, he said.

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Author: AnTy

Japan’s Central Bank to Launch Its Digital Yen Pilot in 2021; China’s CBDC Accelerating BoJ Plans

  • Bank of Japan (BoJ) plans to launch pilot programs on the digital yen in April 2021.
  • The central bank digital currency (CBDC) will not be distributed to the general population yet.

Japan is playing catch up to China’s CBDC plans, Kenji Okamura, vice-finance minister for international affairs, said in an online seminar on Friday, as Reuters reported. Speaking on the dangers of being left behind by the largest Asian economy in digital currencies, Okamura called for the country to move towards developing its own digital yen.

“The (digital) renminbi is moving at a relatively fast pace – presumably, they are aiming to take the first-mover advantage,” he said.

“First-mover advantage is something we should be afraid of.”

Less than 24 hours following the comments, the Bank of Japan (BoJ) announced its plans to officially draft a digital yen plan as early as the start of its next financial year – in April 2021. The report, titled, The Bank of Japan’s Approach to Central Bank Digital Currency, gave the central bank’s first full picture of what its CBDC will consist of.

As reported before, the digital yen will comprise of two main “digital coins” – wholesale CBDC and the general purpose CBDC. BoJ will begin a series of testing phases on the coins by developing a test environment for the CBDC and experiment with its core function as a payment instrument among the general public.

“The Bank will first test the technical feasibility of the core functions and features required for CBDC through a Proof of Concept (PoC)”.

The first proof of concept phase is expected to test basic functions needed in a central bank digital currency, including issuance, redemption, and distribution. The second PoC phase will experiment on additional features on a test environment, checking for a digital yen’s feasibility in the economy. BoJ will then launch a pilot program if the CBDC is successful.

The report further targets security, convenience, and resilience as the main pillars for a successful launch of the CBDC. The latter remains a key factor given the geographical nature of the islandic country.

“Offline use in times of system and network failures as well as electrical outages is also important for Japan, given the frequent occurrence of natural disasters.”

However, the BoJ stressed they still do not have any plans to launch the CBDC to the general public, stating,

“While the BOJ currently has no plan to issue CBDC…it’s important to prepare thoroughly to respond to changes in circumstances.”

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Author: Lujan Odera

Binance’s Plan to Return to Japan Falls Through The Cracks As Deal With TaoTao Collapses

In a report first made public by Coindesk Japan, Binance exchange’s deal with Japan-based crypto trading exchange, TaoTao, has fallen through. According to the statement, the two companies have called off the strategic alliance that could see Binance services return to the island nation.

The largest global cryptocurrency exchange, Binance, announced in 2019 they will be restricting their services to Japan residents with increased scrutiny from the Financial Service Authority (FSA). In January this year, BEG reported Binance was in a strategic alliance agreement with TaoTao, the crypto exchange wing of Z Corporation. The two latter firms are under Z Holdings, the firm in charge of the Yahoo Japan enterprise.

After nine months of discussions, the deal has been abandoned, however, the statement from TaoTao, released Monday, did not give a clear explanation as to why the deal was abandoned.

Binance announced its restrictions to Japan residents shortly before the discussions with TaoTao began. Trading services to Japan-based clients will continue as normal in the future.

Binance is also facing a possible lawsuit in Japan after the locally-based crypto exchange, Fisco (formerly Zaif), which was hacked in 2018, that claimed over $9 million in crypto stolen was transferred and withdrawn from their platform. Binance has yet to comment on the alleged money laundering claims from Fisco.

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Author: Lujan Odera

Deregulating Bitcoin may Increase Speculative Trading Instead of Technical Innovation

Ryozo Himino, the new top financial regulator of Japan, wants the country to take caution over promoting digital assets, arguing that instead of promoting technical innovation, it may end up fueling the speculative fire.

“Deregulating bitcoins and other cryptocurrencies may not necessarily promote technical innovation, if doing so simply increases speculative trading,” Himino told Reuters.

“We’re not thinking of taking special steps to promote cryptocurrencies,” he said. Himino became the new commissioner of the Financial Services Agency (FSA) just last month by replacing Toshihide Endo.

Last year, Himino, under Japan’s chair, spearheaded the G20 debate on regulating cryptocurrencies. Himino was in favor of setting strict regulations on the likes of Facebooks’ Libra, warning the global risks cryptocurrencies pose needs to be addressed first.

Focus on CBDC

According to him, Tokyo needs to shift the focus towards issuing a central bank digital currency (CBDC) as the ongoing coronavirus pandemic could help speed up a cashless society.

Japan has already been studying the technical obstacles to issuing a digital yen and conducting research in joint efforts with other central banks as well.

Himino welcomed these efforts and said, “We shouldn’t be worried about various challenges without even trying to design a plan (for issuing CBDCs).”

“In the end, Japan must think 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.”

No “One-Size Fits All” Solution for Banks

The coronavirus (COVID-19) has been making things worse for the country’s regional banks, which are already feeling the pain of years of ultra-low interest rates and a sluggish economy.

According to Himino, there is no “one-size fits all” solution for the banks and said regional banks could use the bail-out programs of the government, cut costs, or raise capital from the markets, though the situation hasn’t been that bad, he said.

“At present, there isn’t any regional bank that is facing concerns over its financial health.”

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Author: AnTy

Bank of Japan (BoJ) Appoints its Top Economist as the New Head to Oversee Digital Yen

The top economist of the Bank of Japan (BoJ) has been appointed as head of department overseeing research on central bank digital currencies (CBDC), as the central bank steps its efforts to join the race to embrace financial innovation.

Kazushige Kamiyama will be heading the payments and settlement department of BOJ, which has conducted joint research with other central banks on state-backed digital currencies and looked into how the growing presence of cryptocurrencies affect central banking.

As the central bank’s top economist, Kamiyama has spearheaded efforts to use big data in analyzing the economy, an approach that helped Bank of Japan catch real-time changes affecting the country’s economy amidst the ongoing coronavirus pandemic.

BOJ also shared that Seisaky Kameda will be succeeding Kamiyama as its top economist and head of the statistics department.

This move comes at a time when BOJ is working on testing a digital yen. Earlier this month, the central bank released a report about the technical hurdles for CBDC, where it discussed checking the feasibility of such digital money from a technical perspective and considering whether or not to use blockchain for it.

The bank also set up a task force a couple of weeks back that was said to belong to the BOJ’s payment and settlement systems department. The new team is looking more closely into the CBDC by following up on BOJ’s efforts, including joint research it has been conducting with other major central banks since January.

Japan has been cautious about its digital currencies approach, given that it has the most cash-loving population in the world. But the fact that China is making steady progress towards issuing its digital yuan, having chosen the companies to test the CBDC, it has prompted not just BOJ but other central banks and governments to look into the idea of issuing CBDCs more closely.

BOJ has said although it has no immediate plans to issue its own digital currency, it has been conducting research on the issue with other central banks.

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Author: AnTy

Japan’s Central Bank to Prioritize the Development and Potential Issuance of the Digital Yen

  • The Bank of Japan has unveiled plans to zero in on the possible development and issuance of their own Central Bank Digital Currency (CBDC).
  • This has most likely been triggered by China’s efforts to developing its digital Yuan.

News has surfaced that the Japanese Central Bank will now focus their efforts on the development of the digital Yen. This is a there is growing concern that China might beat them by issuing the CBDC first.

Takeshi Kimura, departmental Director General at the BOJ, has reiterated that the Central Bank is still in talks about increasing their scope to past the preliminary phase. This was during his Q&A with a local Japanese news outlet. He indicated the probability of collaborating with the private sector, which may be knowledgeable about such projects. He was, however, not keen to put a timeline on the test runs.

According to Kimura, the digital Yen must constitute of two major attributes: Universal access and be resilient. The digital Yen must be accessible to everyone as it is with the local fiat currency. It must also be resilient and be available at all times, even in the face of calamities that may lead to power outages. He remarked that the reduction in the circulation of the digital yen would mark the consolidation of the digital currency era, further necessitating the urgency for a CBDC.

Notably, China’s push for the CBDC may have rattled other jurisdictions leading to a sudden need for their own CBDC’s. Various Central Banks such as Bank of Thailand have announced test-runs for their CBDC, the digital Baht. This June, an LDP policy committee put forward a dossier labeling China’s head start in the CBDC race as a threat to National security.

China’s own need for the digital Yuan may have been sparked off by the announcement of the ambitious Libra project. Although there is no launch date for the digital Yuan, they have made inroads into the project. Recently the former PBOC Vice-Chair, Wang Zhongmin, declared that they had already completed the backend infrastructure for the digital Yuan, which is an impressive feat in any CBDC initiative.

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Author: Lujan Odera

Japan’s Govt. Is Strongly Considering Launching A CBDC In Cooperation With The US and Europe

Japan is increasing its efforts in developing a central bank digital currency (CBDC), reported the largest financial paper in Japan, Nikkei on Wednesday. The post further confirms that the Japanese government plans to add the development of a digital yen into its policy framework this year.

Governments and central banks are looking at digital payments and currencies more seriously in a bid to plan for future financial systems. With China and Russia leading the field of digital payments, Japan is trying to catch up on developing its own.

Lawmakers in the country have long been calling for regulations and policies to be set in developing a digital yen. Moreover, cooperation with the US and Europe is on the cards to build a local electronic payment system.

Earlier this month, the Bank of Japan (BoJ) released a technical study report on launching a digital yen but said they had no plans to launch it soon. The BoJ has had a knack for CBDCs and digital payment systems for a while now since China’s announced it’s digital yuan is nearly complete.

Other top banks in the country are also exploring the digital asset world as seen with the recent joining of three top Japanese banks – Mizuho Financial Group, Sumitomo Mitsui Financial Group and Mitsubishi UFJ Financial Group (MUFG) – to a crypto exchange-led study group.

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Author: Lujan Odera

Brave Browser Partners With Japan’s Largest Exchange bitFlyer to Build A Crypto Wallet for Users

The largest crypto exchange in Japan, Bitflyer, has partnered with the privacy and crypto-focused Brave browser. The partnership would see the development of a crypto wallet for Brave browser users. This alliance would also help Brave to tap into one of the fastest-growing crypto markets in Japan.

BitFlyer, in its official statement, said:

“Brave is the BAT connected browser, and browsing is an everyday activity. It will be a new opportunity for users to use and earn cryptocurrency. We see it as a new model case to show the potential of cryptocurrency […] We want to make people feel more familiar with cryptocurrency through the partnership with Brave.”

Brave browser users are incentivized with Basic Attention Token (BAT); however, due to regulatory guidelines, Japanese Brave browser users are rewarded with Basic Attention Points instead of BAT. This difference is because Japanese regulations prevent citizens from earning currencies that can be exchanged for money directly.

The development of a crypto wallet by the exchange and browser could change that and allow Japanese citizens to earn in BAT.

Without many revealing details being released, the official announcement did mention that further information would be revealed during an event in Tokyo on July 30. A spokesman from Brave hinted that speculation over the upcoming wallet might be correct, he said:

“At this point, we are using ‘points’ to reward users, but there are some limits. [Through the partnership], we think it may be possible to go beyond that.”

Brave is slowly making its way into the Japanse market while leaving no stone unturned in obtaining popular appeal. Last month it partnered with BTS – the famous S.Korean pop band – and the esports team, Rush Gaming, to develop a browser exclusively for Japanese users. Rush Gaming users can earn BAP, which they can use to support the team.

Over the past couple of months, several Japanse crypto exchanges have listed Brave’s BAT token for trading, and Brave wants to bank on this push. News coming from the company also suggests both BitFlyer and Brave would launch a joint marketing campaign to make people aware of cryptocurrencies and blockchain.

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Author: Hank Klinger