Stay tuned with CashEssentials news ! - beyond payments
By subscribing, you accept our Privacy Policy.

Reacting to Japanese deflation

Categories : Cash is trust
April 22, 2016
Tags : Alternative modes/methods of payment, Asia, Blockchain, Central Bank, Consumers, Demand
Should Japan adopt another strategy to fight deflation?
Communication Team / Equipo de Comunicación

The Bank of Japan (BoJ) introduced a negative interest rate policy on February 16th, a move that resulted in the disappearance of an alarming amount of ¥10,000-notes: the public, fearing the consequences of such a policy, reacted by hoarding Japan’s largest denomination.

The BoJ could make the decision to inject more banknotes into the economy, at the risk of only causing greater confusion and loss of confidence. A possible solution would be to adopt Bank of England’s Chief Economist, Andy Haldane’s proposition to fully do-away with physical bills and only employ blockchain tools for Japan’s monetary policy.

Haldane’s anti-cash speeches in late 2015 caused outrage from the public and central bank officials alike. A direct result of his policy would be the public’s loss of freedom in terms money-management habits: they would have no choice but to pay the bank’s negative interest rates being limited to nothing other than digital wallets.

But blockchain-adoption might not be the only solution in the country of the Mt. Gox exchange scandal. Issuing debit cards with a fixed amount of money to Japanese consumers could be a solution to stimulate a stagnating economy. Or, the government could simply offer zero-coupon bonds to investors, thus reducing the country’s debt.

To read the original article, please click here