Central bank digital currency, crypto assets, and cash demand: evidence from Japan

ABSTRACT

This study surveyed people’s knowledge and use of central bank digital currency (CBDC), crypto asset ownership, and cash demand in Japan. While 4% of the respondents understand CBDC, 10% are willing to use CBDC when available. The demographic characteristics of respondents who understand CBDC are similar to those of crypto asset owners. Average cash demand for day-to-day payment purposes by crypto asset owners is slightly lower than that by nonowners. If CBDC users had similar cash demand to that of crypto asset owners, the introduction of CBDC with attributes similar to crypto assets would not substantially reduce cash demand for day-to-day payment purposes.

KEYWORDS:

• CBDC
• cash demand
• cash hoarding
• crypto asset
• financial literacy

JEL CLASSIFICATION:

• E41
• D14
• E58

Acknowledgment

The author thanks two anonymous referees for their helpful comments on the first draft and Kim P. Huynh for suggesting the 2019 Cash Alternative Survey and for sharing his ongoing work with Daniela Balutel, Christopher Henry, and Marcel C Voia. This work was supported by the Japan Society for the Promotion of Science under KAKENHI Grant number 21K01566.

Data availability statement

The data provider for this study, Intage Inc., disagreed with some of the data being shared publicly, so supporting data are unavailable.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

¹ See Lieven et al., (2022) discussion on the crypto asset market.

² See German, Dutch, and Japanese surveys (Deutsche Bundesbank 2021; Bijlsma et al. 2021; Bank of Japan 2021).

Additional information

Funding

The work was supported by the The Japan Society for the Promotion of Science [KAKENHI Grant number 21K01566].