Himino on digital money: Central banks must ensure singleness
Bank of Japan Deputy Governor Ryozo Himino highlighted the critical role of central banks in preserving the 'singleness of money' amid the rise of stablecoins and central bank digital currencies. Speaking at the Japan Society of Monetary Economics, Himino emphasized the need for a holistic design of future monetary systems.
Divergent paths for digital money
The United States and Europe have taken divergent approaches to digital money, with the US enacting the GENIUS Act in 2025 to regulate stablecoins and prohibiting federal CBDC issuance.
In contrast, the ECB announced plans in October 2025 to launch a digital euro by 2029.
Japan, a pioneer in stablecoin legislation, is advancing its CBDC pilot program, preparing for both paths.
Himino stressed that a holistic design of future monetary systems is crucial, considering technical feasibility, social costs, user convenience, resilience, financial stability, and monetary policy implications.
He noted that stablecoin business models might struggle under zero or negative interest rates, and CBDCs may find it difficult to attract general users in unstressed conditions.
The speech highlighted the trade-offs between convenience and resilience, citing Sweden's Riksbank recommendations for public payment preparedness, including holding cash.
The bedrock of money's singleness
Money serves as a unit of account, store of value, and medium of exchange.
Despite the proliferation of payment methods, from mobile apps to credit cards, they all share a fundamental 'singleness of money': the universal understanding that a payment is completed.
This concept is crucial for the medium of exchange function.
Himino detailed how bank transfers, the backbone of modern payments, rely on central bank settlement.
When funds move between different commercial banks, the central bank adjusts their respective reserve balances.
This process, exemplified by the Bank of Japan's BOJ-NET system, ensures payment finality and maintains trust, as not all commercial bank deposits are equally convenient or creditworthy.
The central bank's role in settlement thus underpins the entire monetary system.