Ryozo Himino, the new top financial regulator of Japan, wants the country to take caution over promoting digital assets, arguing that instead of promoting technical innovation, it may end up fueling the speculative fire.

“Deregulating bitcoins and other cryptocurrencies may not necessarily promote technical innovation, if doing so simply increases speculative trading,” Himino told Reuters.

“We’re not thinking of taking special steps to promote cryptocurrencies,” he said. Himino became the new commissioner of the Financial Services Agency (FSA) just last month by replacing Toshihide Endo.

Last year, Himino, under Japan’s chair, spearheaded the G20 debate on regulating cryptocurrencies. Himino was in favor of setting strict regulations on the likes of Facebooks’ Libra, warning the global risks cryptocurrencies pose needs to be addressed first.

According to him, Tokyo needs to shift the focus towards issuing a central bank digital currency (CBDC) as the ongoing coronavirus pandemic could help speed up a cashless society.

Japan has already been studying the technical obstacles to issuing a digital yen and conducting research in joint efforts with other central banks as well.

Himino welcomed these efforts and said, “We shouldn’t be worried about various challenges without even trying to design a plan (for issuing CBDCs).”

“In the end, Japan must think hard about whether to issue CBDCs because there are merits and demerits to doing so. What it can do now is to be ready so that when Japan decides to issue CBDCs, it can do so straight away.”

The coronavirus (COVID-19) has been making things worse for the country’s regional banks, which are already feeling the pain of years of ultra-low interest rates and a sluggish economy.

According to Himino, there is no “one-size fits all” solution for the banks and said regional banks could use the bail-out programs of the government, cut costs, or raise capital from the markets, though the situation hasn’t been that bad, he said.

“At present, there isn’t any regional bank that is facing concerns over its financial health.”

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