Japan Is Preparing To Discover The Benefits Of CBDC
- The Japanese finance ministry intends to convene an expert group next month to investigate the viability of a CBDC or digital yen.
- At the same time, a digital yen pilot program, including the BOJ and other financial players, begins.
- According to BOJ officials, there are presently no definite intentions to create digital money.
According to NHK, the Japanese government is contemplating convening a panel next month to investigate the benefits of a central bank digital currency (CBDC) or digital yen.
Although the Bank of Japan claims there are no firm plans to issue a digital yen at this time, the Finance Ministry is completing preparations for an expert group to be formed as soon as April.
The panel is anticipated to debate the development of a framework for a digital currency based on the results of the Bank of Japan’s (BOJ) more than two years of proof-of-concept trials.
The panel’s establishment coincides with the beginning of a digital yen pilot program, including the BOJ, financial institutions, and other private-sector partners.
According to BOJ officials, there are presently no definite intentions to create a digital currency. It is likely to take some time to iron out the necessary legal and framework difficulties.
The ministry intends to consider the panel’s recommendations and prepare for the future implementation of a digital yen.
CBDCs are digital counterparts of fiat cash. CBDCs, like real currency, are issued by central banks and backed by the government’s full confidence and credit. But, unlike the currency, CBDCs are never issued, necessitating the development of new minting and trading mechanisms.
CBDC experiments have been extensively undertaken in possible locations other than Japan. China is widely regarded as the forerunner in the issuance of digital currency, and it is also the nation most often referenced in criticism that the motivation to establish a CBDC is authoritarian in character. In February of last year, an experimental digital yuan was introduced during the Beijing Olympics.
European, American, and Chinese central banks are already investigating the feasibility of digital currencies. They are interchangeable with banknotes and coins. In 2022, the US Federal Reserve will also provide its first report on a digital dollar.
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