Japan backs IMF efforts to improve guidance on digital currency risks

Japan will support the International Monetary Fund's efforts to improve practical guidance on risks related to the introduction of central bank digital currencies, Finance Minister Shunichi Suzuki said Friday.

To that end, the IMF is currently developing a handbook to be used by policymakers and Japan will provide financial assistance for the work.

"We expect the IMF to help member countries explore the introduction of CBDCs and assess their risks through its capacity development, drawing on the handbook," Suzuki said in a statement to the multilateral lender's policy-setting panel.

With many countries, particularly China and other emerging economies, moving fast toward the introduction of such digital currencies, Suzuki, who attended a meeting of the International Monetary and Financial Committee in Washington, suggested the importance of creating common standards for them.

"It is critical to design institutional and regulatory frameworks with due consideration to the potential impacts of CBDCs on financial stability and capital flows, and to reduce associated spillover effects on other countries' monetary policy and the international monetary system," he said in the statement.

The meeting of the 24-member committee, which was held as part of IMF and World Bank biannual gatherings, discussed issues including the current state of the global economy and ways to help low-income countries.

But the panel, comprising ministers and central bank governors that usually meets twice a year, did not issue a joint communique. Its chair Nadia Calvino, Spanish economy minister, said that was because of differences over Russia's invasion of Ukraine.

"Most members strongly condemned the war in Ukraine and stressed that it is causing immense human suffering and exacerbating existing fragilities in the global economy," Calvino said in a chair's statement that she released instead.

The members include China and Russia. The panel, which plays a central role in setting the course for the work and policies of the IMF, also did not release a joint communique last year.

© Kyodo News