Crypto, the BoJ’s choice with the reduction of quantitative easing?

The Bank of Japan (BoJ) plans to gradually reduce quantitative easing measures. This decision, aimed at ensuring a smooth transition, raises questions about the future of cryptos and CBDCs within the Japanese economy.

The BoJ at a crucial turning point in its monetary policy

The Bank of Japan (BoJ) is preparing to gradually reduce quantitative easing measures. This decision marks a significant change in its strategy which now aims for a “soft exit”. This, in order to avoid a major impact on the financial markets,

This development comes after unprecedented monetary easing measures initiated in 2013. These measures have in fact considerably expanded Japan’s monetary base and increased the bank’s assets.

BoJ Governor Kazuo Ueda has explained that this change in monetary policy was intended to balance the effects and side effects of quantitative easing measures. He also highlighted the reasons for this transition: the improvement in the results of automobile and distribution companies, thanks to the depreciation of the yen and the increase in prices.

The resumption of salary negotiations and salary increases is also possible by the end of the year. This could thus support the achievement of the BoJ’s 2% inflation target.

Crypto or CBDC as an alternative to cash?

This decision also comes in a global context where many central banks are considering cryptos or CBDCs as alternatives to traditional cash.

Indeed, Australia, for example, is considering reducing the use of cash and is actively exploring cryptos and CBDCs. This shows that cryptos and digital currencies are of increasing interest to large countries.

The BoJ and other central banks will need to closely monitor these trends. Indeed, the transition to CBDCs or cryptos could become an inevitable reality in an increasingly digitalized world. The way in which Japanese banks manage this transition will influence not only national markets, but also international economic dynamics.

Time will tell whether the BoJ will choose to fully adapt to cryptos in a rapidly evolving financial landscape. Note that Japan has already launched its pilot phase for the digital yen in February. This thus shows a concrete interest in CBDCs.