Hiroshi Nakaso, Deputy Governor of the Bank of Japan, reveals directed efforts to include Fintech and blockchain technology into the Japanese banking system. Nakaso also shot down rumors that Japan had plans to repeal current currency in exchange for a digital version.
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Speaking at the Bank of Japan Joint Conference, held at the University of Tokyo, Nakaso was optimistic about the potential of blockchain in changing the foundation of banking and financial activities. Bringing banking to under-exposed populations from third-world areas, would create positive feedback between finance and the economy.
Nakaso categorized Fintech into 3 separate parts; blockchain, artificial intelligence or big data, and smartphone innovation. Combine all three, and you have the beginnings of a completely virtual bank. Of course, some issues would crop up; such as taxation and regulation, and chiefly that the majority of block-chain technology still hasn’t been optimized for real-world application.
Nakaso also noted the problem of Mt. Gox, a digital bitcoin wallet, and its failures, noting that it wasn’t an inherent problem with bitcoin itself, but rather the actions of a corrupt third party. This problem is one that could be repeatedly faced when decentralized systems like bitcoin, place trust in third parties.
In the end, and perhaps most notably, Nakaso clarified that were was no timeline for rolling out a digital currency that would replace all Japanese bills in circulation currently. There are many pros, namely reduced costs, when switching to digital currency; there are no processing or storage fees that current traditional bills face. But the questions that arise are more difficult to resolve, and will need time. How to handle transaction information, finality of central banks; all of them are crucial to a strong system.
Nakaso’s talk gave an overall impression of a bright future for blockchain and bitcoin technology in Japan. Many countries are taking steps to embrace this technology, notably China, where recruitment of blockchain tech talent is at the foreground; Japan may soon follow suit.