The Bank of Japan (BoJ) has announced the cancelation of its central bank digital currency (CBDC) project due to lack of interest from the public.
Japan Scraps CBDC Plans
The BOJ, which began testing the technical viability of issuing a CBDC in April 2021, has concluded that it would not be technically feasible for the government to release a yen-backed CBDC at the present time.
The Central Bank of Japan had completed its first and second phases of CBDC testing, but has since elected to forgo the third phase, which would have seen the release of a pilot program for participation by private businesses and end-users.
Cash Over Digital Currency in Japan
According to reports, the BOJ scrapped its CBDC program due to a perceived lack of interest from Japanese citizens. The public did not deem the use of a CBDC attractive enough to consider because of the high adoption of digital payments in the country.
The central bank revealed that much of the country’s population already has widespread access to low-cost, efficient internet banking services and digital payment tools.
Japan has one of the lowest retail deposit interest rates at 0.001%, reinforced by its low volatility currency. In light of this, the government believes that crypto will find it difficult to replace cash as the go-to medium for transactions among Japanese citizens.
On the Flipside
- China has given the go ahead for its CBDC launch, with the People’s Bank of China (PBoC) gradually onboarding more provinces and cities to the CBDC platform.
Why You Should Care
The widespread access to digital payments and payment portals has led to Japanese citizens holding a high preference towards cash over other forms of exchange, especially due to the benefits offered by such services.
Read more about the progress of China’s CBDC project in:
Looking for information on other countries that are also exploring CBDCs? Read: