before evaluating whether the issuance of central bank digital currencies could contribute to enhancing the effectiveness of monetary policy and financial stability. regarding the effectiveness of monetary policy, if we want to overcome the zero lower bound of nominal interest rates, we need to completely eliminate cash. even if we lower the interest rates on central bank digital currencies below zero, the fund shift from them into cash will occur as long as cash is used. nonetheless, if the central bank abolishes cash, which is widely used, it would make payment and settlement infrastructures inconvenient. moreover, cash has its own resiliency as a payment instrument, since it does not rely on the electricity supply. indeed, cash was effectively used even during the large - scale blackout on the island of hokkaido which was caused by the earthquake in september. since the central bank's duty is to contribute to economic society by providing efficient infrastructure for payments and settlements, abolition of cash at this stage is not an option. also, the central bank needs to carefully consider the possible impacts of central bank digital currencies on financial stability and financial intermediation, especially if they could substitute for not only cash but also bank deposits. for example, if the central bank issues its own digital currencies to the general public and makes them accessible through mobile instruments, stresses in the banking system might cause a " digital bank run, " in which people move their funds from deposits to central bank digital currencies. in cases of traditional bank runs, depositors physically come to bank branches to withdraw their deposits. on the other hand, in the situation of digital bank runs, since people can easily move their funds without even go to a bank branch, liquidity problems could accelerate very rapidly. moreover, if central bank digital currencies replace not only cash but also bank deposits, they could squeeze banks'credit intermediation and influence the supply of credit to the economy. in other words, the issuance of central bank digital currencies could make the existing two - tiered system into a single tiered system if they replace bank deposits. nonetheless, a single tiered system may have disadvantages, especially in terms of the allocation of financial resources to support economic growth led by private initiatives. we may need to consider this issue also from the viewpoint of effective use of information and data. in the current two - tiered system, the central bank does not obtain the detailed data attached to people's daily transactions.

october 20, 2018 bank of japan the future of money speech at the 2018 autumn annual meeting of the japan society of monetary economics masayoshi amamiya deputy governor of the bank of japan （ english translation based on the japanese original ） i. introduction it is a great honor to have this opportunity to deliver a speech at the japan society of monetary economics. today's topic is " the future of money. " indeed, this topic is now gaining great attention and being lively discussed among various entities, due to on - going it innovation, global developments of various cashless payment means including mobile payments, the emergence of crypto - assets and the idea of central bank digital currency. money is the core of financial services and economic society, and central banks were born to play a key role in the fundamental infrastructure regarding money. accordingly, thinking about the future of money inevitably makes us reconsider the future of financial services, the economy and central banks. moreover, as we can see with the global " data revolution " behind the recent developments of cashless payments, the future of money is closely linked to how information and data will be used in economic society in the coming era. in this speech, please allow me to use the word " money " as a general term covering various payment and settlement means, and which is not limited to central bank money and bank deposits. ii. the function of money money and credit before going into the issues regarding the future of money, i would like to touch upon the origin and fundamental function of money. money is undoubtedly one of the greatest inventions of humans, comparable to " language " or " fire. " money enabled people to exchange goods and services across space and over time, and to build an economic society. indeed, it would have been extremely difficult for humans to barter goods or services without using money, since such direct exchanges can only be implemented by a " double coincidence of wants. " economics textbooks describe the three functions of money as " a measure of value, " " a store of value, " and " a medium of exchange, " and credit is the foundation of all of them. money can perform these functions because people believe that all other people will accept money in the future. humans became able to share such intangible credit with unknown others by building a " chain of trust, " and with that built an economic society. until now various materials such as sea - shells and pieces of metals had been used. the core value of money, however,