Japan to launch its CBDC by 2022?
Japan is now working on creating a digital version of the yen (JPY) by the end of 2022, says the country’s official in charge of digital currencies. Debates about the impact of the central bank digital currency (CBDC) on financial institutions is likely to follow.
Bank of Japan to facilitate the implementation
Hideki Murai of the Liberal Democratic Party of Japan said to Reuters on Monday that the country would soon outline its vision for a national CBDC. According to him, when this information is disclosed, discussions about possible consequences for Japanese financial institutions will follow.
In fact, several questions may arise, including the possible course of action for the Central Bank if the digital yen has a negative impact on private companies. In order to reassure commercial banks, Murai has promised that the Bank of Japan would facilitate access to customer data and activities.
However, the official report does not rule out the possibility of a huge impact on financial institutions and settlement methods following the introduction of CBDC by the Bank of Japan. Murai has also praised the reshaping potential the digital currency would offer to the Japanese financial field.
Yen catching up to e-CNY?
Let’s not forget that in March, the Central Bank of Japan set up a liaison and coordination committee charged with preparing and testing the proof of concept phase, which was to take place in April. While the Central Bank admits it’s not ready yet for a CBDC, the government remains very optimistic.
China, in its turn, is working hard to digitise its national currency. Being the leader in CBDC testing and implementation, China is planning to put part of its digital currencies into circulation by the Beijing Winter Olympic Games in February 2022.
This justifies the Bank of Japan’s vigilance towards and monitoring of China’s actions. In an effort to reassure the US, the Bank of Japan stressed that it does not consider the CBDC as a threat to the American dollar and its status of the world’s reserve currency.
The Japanese financial ecosystem is buzzing following the announcement of a possible implementation of a national CBDC. If the plans to bring about the digital yen do follow through, the relationship between the yen and the yuan may change dramatically.
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