The Bank of Japan shouldn’t view the issuing of a digital currency as a monetary policy option as doing so could severely damage the economy, according to a former BOJ official who led research into digital money.

"Some say that negative interest rates could work more effectively with a digital currency, but I don’t think so,” said Hiromi Yamaoka, the former head of the BOJ’s financial settlement department.

Yamaoka said that while it’s clear Japan’s payment systems need to change with the help of digital money, he was totally against the idea of the central bank using a digital yen to gain extra policy leverage.