Japan's Central Bank and Government Explore Launch of Digital Yen by Spring 2024
Summary:
In their first official meeting, the Bank of Japan (BoJ) and the Japanese government discussed launching a central bank digital currency (CBDC), hoping to solve any legal complexities by spring 2024. While no official confirmation of the digital yen's release was given, a definite decision will be made following a nationwide debate by 2026. BoJ successfully wrapped up its second CBDC testing phase involving 100,000 users in May 2023 and plans to proceed with a pilot project soon. With an open attitude toward CBDCs, Japan differs from other countries like the U.S., which continue to resist digital currencies. Within Asia, several nations are actively researching their CBDC options as well.
The first official deliberation between Japan's government and the Bank of Japan (BoJ) addressing central bank digital currency (CBDC) has recently taken place. As per local television station NHK's report on January 26, a mutual understanding was reached between the government and the BoJ about rectifying any legal complexities associated with introducing digital yen by spring of 2024. However, the launch of the digital yen hasn't been officially endorsed by either entity. In fact, a definitive decision will only be taken in 2026 or later, subsequent to "a nationwide debate". A report by a panel of experts from the Ministry of Finance was presented in front of the BoJ in December 2023, advising the immediate issue of a digital yen. The experts suggested that the Japanese CBDC should exist alongside physical cash and recommended keeping the amount of personal data stored to the bare minimum. The BoJ concluded the second round of tests for the CBDC in May 2023 with over 100,000 volunteers and five intermediaries processing 500 to 3,000 transactions per second. Following the successful trial, the BoJ has moved on to the agreed-upon CBDC pilot project which is designed to study the "complete process flow" and greater integration with external systems. Despite Japan's global image as a "cash-oriented" nation, it consistently maintains a positive viewpoint on CBDCs, in stark contrast to the anti-digital currency sentiment in the USA. However, the BoJ's acceptance of CBDCs does not mean it is against cryptocurrency. Starting from April 2024, local businesses might not have to pay "virtual gains" taxes on their cryptocurrency assets. Asia as a whole remains open to the idea of CBDCs with China leading the way in introducing its "digital yuan". Other countries including Hong Kong, Singapore, Malaysia, India, and South Korea are studying their options. Recently, Cambodia's central bank declared that it plans to launch its CBDC within this year. This will initiate the processing of 'Lanka Pay' and 'Central Bank Digital Currencies', as stated by the Bank.
Published At
1/30/2024 12:04:15 PM
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