Thursday, April 27, 2017 12.31AM / Africa Fintech
The rise of nonbank giants such as PayPal and WeChat is leading central banks to reassess to whom they should allow access to their payment and settlement systems, says a top Bank of Japan official. During a speech, BoJ deputy governor Hiroshi Nakaso said that with the structure and composition of payment service providers rapidly changing in the age of fintech, the “environment surrounding central bank payment and settlement systems is entering a new phase”.
The deputy governor noted that some central banks are already reconsidering access to systems. For instance, last year the Bank of England said it will allow non-bank ‘payment service providers’ to hold accounts, so that they can compete with existing banks to provide current accounts.
Nakaso also used his speech to discuss central bank digital currencies (CBDCs), which could partially replace old-fashioned paper banknotes.
“If CBDC is directly issued to the general public, it would allow wider access to central bank payment and settlement systems both in time and space. In an extreme case in which CBDC provides the same functionality as banknotes as an alternate measure, it could enable everyone to access central bank accounts 24/7, year-round.”
CBDCs have been on the agenda at several central banks, including in Hong Kong, Canada and Singapore. Nakaso declined to give details of the BoJ’s own efforts in the area, although his colleague Shigehiro Kuwabara recently argued that while distributed ledger technology has huge potential, it has not yet reached the stage where it can fully replace current centralised systems.
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