universal to everyone. most would agree that the central bank should play the role of provider of such instruments even in the digital society. cbdc is expected to play a part in this. i would like to share one of the views often expressed by payment service providers. as mentioned earlier, the entry of new service providers into the payments market is one of the key changes in the payment systems arena. in this sense, ensuring the interoperability between private digital money is a challenge. for example, payment platforms operated by nbpsps, such as “ xyz pay ” do not necessarily share member merchants. in other words, it is often the case that a digital money issued by a nbpsp cannot be accepted by another nbpsp ’ s member merchant. similarly, person - to - person ( p2p ) payments or money transfers cannot be executed between payment platforms operated by different nbpsps. what roles is cbdc expected to play in these cases? cbdc can help remove barriers of p2p payments and significantly improve the interoperability between different types of private digital money. cbdc can contribute to improving the efficiency of payments by interlinking various types of private digital money. in fact, there seem to be high expectations for cbdc in this respect. 3 / 4 bis central bankers'speeches however, the story is not that easy. there are a lot of issues to be considered comprehensively regarding cbdc, including its implications on payment and settlement systems and the overall financial system. as in the cases mentioned earlier, while the issuance of cbdc could contribute to interlinking various types of private digital money, it could also present the risk of crowding out the existing private services, such as bank fund transfers. moreover, if the payment cost associated with cbdc is much lower than that of private payment services, most of the merchants would prefer to accept payment via cbdc, rather than via the private digital money. the central bank is able to offer services that are cheaper than those offered by private entities because it bears a certain cost from the perspective of providing public goods, that is, the core infrastructure for payment and settlement. depending on the design and pricing of the core infrastructure, the central bank could suppress private business and discourage innovations. in addition, if firms and individuals preferred holding cbdc to bank deposits, this would affect banks ’ funding and the function of financial intermediation, including bank lending. thus, it could alter

masayoshi amamiya : central bank digital currency and the future of payment and settlement systems remarks by mr masayoshi amamiya, deputy governor of the bank of japan, at the future of payments forum, tokyo, 27 february 2020. * * * introduction i would like to thank all of you for attending the future of payments forum today. recent private sector initiatives, including stablecoins, indicate the customers ’ need for convenient, fast and efficient payments. to meet this need, the central bank should cooperate with the private sector and continue to improve the payment and settlement infrastructures it offers. in this regard, the question as to whether the central bank should issue digital currency ( cbdc ) or not has become an important issue. when we look into how we should picture the future of payment and settlement infrastructures in japan, in a digital society, it is important to consider in what forms the central bank should provide central bank money, and how to improve the private sector ’ s payment services. these two issues are closely related and should not be examined separately. i sincerely hope that we will have a fruitful exchange of views, as we have so many experts here today at the future of payments forum. when addressing these issues, it is important to explore how it innovations and private sector initiatives could impact the payment and settlement systems and the architecture of money. to initiate our discussion, i would first like to touch upon “ what will remain unchanged ” and “ what will change ” in the foreseeable future. what will remain unchanged there are three things that will not change or should not be changed regarding the payment and settlement systems, and money. first, the basic architecture of money will remain unchanged. there are two forms of money : token - based or account - based. token - based money is a form of money in which monetary value is locally stored in some kind of media. cash and electronic money issued by japanese transport companies are examples. there is a difference in the type of media in which monetary value is stored, i. e. paper and electronic devices, but the basic architecture remains the same where payments are made by transferring the monetary value stored in that media. meanwhile, the transfer of value of an account - based money occurs when the issuer debits the account of the payer and credits the account of the payee, upon receiving the value transfer instruction from the payer. a typical example of account - based money is bank deposits. there are a number of ways