Japan has also joined the countries that are taking the first steps towards the development of a central bank digital currency (CBDC). Last April, local authorities announced the start of the first phase of the creation of a new asset. However, it seems that will not see the light for more than a year.
The leader of the Liberal Democratic Party panel on digital currencies in the Japanese Parliament, Hideki Murai, assured that there would be no major advances during the current year 2021 in this regard. However, he did want to mention that By the end of next year 2022 they will have a clearer vision about the CBDC of Japan.
The main objective of the Japanese Government is that the digital yen serve as intermediary between the Central Bank of Japan (BOXWOOD) and deposit holders. The purpose is to be able to carry out a modernization of the country’s financial structure; and that also means greater agility in internal processes.
The caution of the organizations responds to the nervousness that has been seen in financial institutions about the launch of a new type of currency. Progress in developing the infrastructure necessary for the arrival of the digital yen will not be too hasty; nor will the decision whether or not to start broadcasting it and whether it is fully in use.
Murai referred to this matter, making his position clear regarding the digital yen: «If the BOJ were to issue CBDC, it would have a major impact on Japan’s financial institutions and settlement system. The CBDC has the potential to completely reshape the changes occurring in the country’s financial industry.»
The Government’s intention is to have a new asset compatible with the rest of CBDC.
Three banks in Japan join the development of the digital yen
«If a digital yuan becomes so convenient that tourists use it frequently or becomes a primary settlement means for trade, the relationship between the yen and the yuan could change,» Murai said, referring to China’s CBDC.
On the other hand, the main protagonists of the financial scene in Japan will collaborate in the development of the digital yen. In fact, the three most important banks in the country will join a group of three dozen private firms to advance the development of the Japanese CBDC.
Specifically, it is about the banks Sumitomo Mitsui Financial Group, Mitsubishi UFJ Financial Group y Mizuho Financial Group, all of them with previous experience when developing digital tokens. In this way, they will seek to take advantage of all their experience in this area for the development of the national CBDC.
According to what different people involved in it have revealed, Private financial institutions will have the duty to issue the assets. Therefore, what the BOJ is looking for is to achieve the creation of a framework that can allow several platforms to be compatible with each other.
One of the priorities of the group formed for the development of the CBDC is that private deposits and digital yen coexist. They are not looking for money to rush out of deposits, but neither are they looking to issue a digital currency that is not going to be widely used.
Despite the great advance of digital currencies in the region, Japan has remained one of the developed countries in which there is a greater use of physical money among its citizens. Specifically, the use of cash in Japan reaches 80%, well above China’s 30%.
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