Kozo Yamamoto, head of the Liberal Democratic Party's council on financial affairs, said the BOJ risked being overtaken by private players who could launch their own digital currencies that could undermine the yen."If something too convenient pops up from the private sector, people might start to doubt whether they need yen as a currency unit. We must prevent this from happening," he said."This is fundamentally about protecting Japan's currency sovereignty.
Revising the law to include digital currencies would also present a good opportunity to make other changes such as adding an inflation target and job creation to the mandates, much like the US Federal Reserve, he added.The BOJ does currently set 2% as its inflation target, introduced in 2013. But the target is not stipulated under the BOJ law, which says only that its role is to ensure Japan's price moves and financial system are stable.
But China's steady progress toward issuing digital currencies has prompted the government to reconsider, and pledge in this year's policy platform to look more closely at the idea.