- Japan’s Finance Ministry has established an expert panel to consider the possibility of introducing a digital yen.
- Central bank digital currencies (CBDCs) are still in the early stages of development.
- Many central banks worldwide have been exploring the potential for issuing CBDCs.
Japan Moves Closer to Issuing Digital Yen with BOJ Study
The panel will focus on creating a framework for a central bank digital currency (CBDC) and will refer to a technical study conducted by the Bank of Japan (BOJ) over the past two years. The Ministry aims to utilize the findings from the panel to prepare for the potential issuance of a digital yen.
Officials from the BOJ have stated that they currently do not have any concrete plans to issue a digital currency themselves. It is expected to take time to address the legal and framework issues that must be resolved before such a move can occur.
The Finance Ministry of Japan plans to consider the opinions of the expert panel and prepare for the possible introduction of a digital yen. Meanwhile, central banks in Europe, the United States, and China are already exploring the feasibility of digital currencies, which can be used in the same way as banknotes and coins.
China is widely regarded as the frontrunner in issuing a digital currency, having debuted the digital yuan on an experimental basis at the Beijing Olympics in February last year.
The US Federal Reserve also released its first report on a digital dollar in 2022. The European Central Bank is expected to decide this year whether to issue a digital euro. India is also planning to issue its currency in digital form.
On the Flipside
- The recent pilot program for Japan’s CBDC is undoubtedly an exciting development; however, Japan has been relatively slow in adopting cryptocurrencies, with regulators typically taking a cautious approach.
- Three Japanese megabanks and regional banks will collaborate with the Bank of Japan in the CBDC pilot program, which could also benefit from lifting the stablecoin ban by increasing the adoption and usage of the digital yen.
- Japan’s aging population may pose a challenge to implementing a CBDC, as elders may be less likely to adopt a new payment system.
Why You Should Care
Introducing a central bank digital currency in one of the world’s largest economies would signal a growing acceptance of digital currencies by governments and traditional financial institutions.
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