such as splitting up monopoly firms and strengthening regulations to resolve distortions in competition. therefore, i believe it is not really appropriate to issue cbdc for the purpose of promoting competition in the retail payments market. fundamental functions of currency and a two - tiered system to explore the rationale for issuing cbdc, we can simply get back to the fundamental roles of currency. payment instruments that are safe, reliable, inexpensive, and available to all are essential to support economic activities. i think most people would agree that the central bank should continue to be responsible for supplying these instruments in the digital age as well. the rationale for issuing cbdc may basically rest on this. cbdc functions not only as a means of payment but also as a store of value. in normal times, people may not be aware of the difference between central bank money and private walter engert, ben s. c. fung, and scott hendry, " is a cashless society problematic?, " bank of canada staff discussion paper 2018 - 12, october 2018. money ( i. e., money issued by the private sector ) ; however, this is not the case in times of financial crisis or natural disaster. when people are anxious, the precautionary demand for central bank money free of credit risk tends to increase. when the great east japan earthquake hit japan, there was a significant increase in cash withdrawal in disaster areas. 3 also, when the lehman brothers bankruptcy led to a financial crisis in iceland, demand for cash soared so high that the central bank of iceland's inventory of banknotes was nearly exhausted. 4 these facts show that it is reasonable to say that a framework should be in place to supply highly credible central bank money that is suitable for the digital age. nevertheless, issuing cbdc in normal times with the purpose of preparing for crisis could pose a new challenge. for example, if cbdc starts to substitute for bank deposits, it could squeeze banks'credit intermediation and affect the real economy. there is also the view that cbdc, which functions as a safe haven in times of stress, would rather amplify the stress. since all it takes is a few clicks on a computer or smartphone, a shift from bank deposits to cbdc would occur in a much more drastic way in the digital age than with traditional bank runs, and thus could exacerbate a financial crisis. this is called a " digital bank run. " as we look deeper into these issues

funds transfer system which operates on a 24 / 7 basis - - launched by the hong kong monetary authority in 2018. this has enabled users of these service providers to conduct p2p money transfers. users can even transfer funds to bank accounts using electronic money issued by these nonbank payment service providers. to the extent that interoperability is ensured, the general acceptability of electronic money issued by the private sector will likely increase. with regard to interoperability among private digital currencies, whether a central bank should allow new nonbank payment service providers, such as fintech firms, to open current accounts at the central bank may be an issue for discussion. if the interoperability of private money is enhanced through safe and efficient settlement using central bank current accounts, private digital currencies could resemble cbdc in terms of general acceptability. however, central banks need to examine the notion of allowing nonbanks to access current accounts comprehensively from various aspects, including the potential impact on financial systems in addition to interoperability. needless to say, nonbanks seeking access to payment and settlement systems via central bank current accounts would be required to meet strict standards in many areas, such as financial soundness, information security, and risk management. overseas, nonbank payment service providers are now allowed to open current accounts at central banks in countries such as the united kingdom and australia. this is also currently under consideration in switzerland and singapore. settlement finality now, i would like to touch upon the issue of " settlement finality. " finality means that settlement of an obligation is irrevocable. central bank money is not only credit risk free, but also provides immediate finality. banknotes can be used to settle obligations 24 hours a day, 365 days a year with finality. in japan, the launch of the zengin more time system in october 2018 has enabled users to send funds on a real - time basis 24 hours a day, 365 days a year for transfers of less than 100 million yen per transaction ( hereinafter referred to as " retail transfers " ). it should be noted, however, that transactions between financial institutions, accompanying these retail transfers between users, are settled on a deferred net settlement ( dns ) basis. under a dns system, payment instructions received from financial institutions are pooled until a designated time, and then the gross values of incoming and outgoing funds are netted out. only the net amount is settled. while the