BOJ won't introduce digital yen as means for negative rates

The introduction of a digital yen in order to achieve negative interest rates will not become reality as of yet, a senior central bank official said on Wednesday.

BOJ Executive Director, Shinichi Uchida stated that in future experiments on issuing a central bank digital currency (CBDC), the BOJ will think of features such as setting a limit on the number of transactions and holdings for each entity.

Furthermore, the central bank will also research whether to make the digital yen interest-bearing, though doing so might be unnecessary as the CBDC could end up being a close substitute for bank deposits, he said.

"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.

The BOJ has still not decided if they will issue a digital yen but has moved to a second phase experiment from April to prepare for a possible launch in the future.