Central bank digital currencies could significantly impact the current structure of the banking system, a Bank of Japan official recently.

In his closing Remarks at the IMF-JFSA-BOJ Conference on FinTech, Masayoshi Amamiya, Deputy Governor of the BoJ, explained how central bank digital currencies could impact the existing two-tiered currency system and private banks' financial intermediation.

Under the current system, direct access to the central bank’s accounts is allowed only to a limited number of entities such as private banks. The central bank leaves the private sector the opportunities to utilize detailed data attached to daily transactions, while it holds the authority to obtain the information necessary to maintain the stability of payment and settlement systems through operating its wholesale settlement systems.

“The issuance of central bank digital currencies for general use could be analogous to allowing households and firms to directly have accounts in the central bank. This may have a large impact on the aforementioned two-tiered currency system and private banks' financial intermediation,” Amamiya said. “The issuance of central bank digital currencies could also affect such a role-sharing structure for utilizing information.”

He clarified that the BoJ is not planning its own digital currencies at the moment, adding that the bank is interested in developing a better understanding of the related issues.

“Although the Bank of Japan does not have a plan to issue its own digital currency at this juncture, the Bank fully acknowledges the importance of deeply understanding innovative technologies not only for maintaining financial stability but also for seeking the possibility of applying them to central bank infrastructure in the future,” Amamiya added.