A consortium of 30 formidable Japanese companies from sectors including banking, telecommunications and retail have announced a collaborative effort to begin testing and experimentation on a country-wide digital currency.
Initially reported by Reuters, the project is scheduled to begin in 2021 and supports the trajectory of recent announcements made by the Bank of Japan to begin testing a Digital Yen. In this project, market experimentation in terms of issuing the currency will be conducted by private banks.
The Japanese government has been actively engaging in the ideal of a cashless society for the last few years. With a historical yearn for cash, Japan’s statistics for cash usage plot an outlier in the Asian markets. One could say that Japan has a yen for the Yen!
According to the 2018 World Cash Analysis, Japan also lacks behind many of their developed-nation counterparts on the global stage. Analysing cash as a share of all payments, Japan comes in third with 82%. The gap is contextualised by the UK’s figure at 42%, China’s at 40% and the US at 32%.
With the Olympic and Paralympic Games on the horizon for next summer in the capital Tokyo, the government has genuine incentives to begin construction of the financial infrastructure and societal usability of digital payments needed to accommodate the influx of foreign tourists and spectators.
Chair of the Group and former BOJ executive, Hiromi Yamaoka discussed the projects vision during an online call: “Japan has many digital platforms, none of which are big enough to beat cash payments.”
The three largest banks in Japan: Mitsubishi UFJ Financial Group, Mizuho Financial Group and Sumitomo Mitsui Financial Group have each independently integrated digital payment within their systems.
However, due to the lack of cohesion in development, the traction in adoption within society has been slow. Yamaoka believes that a unification must take place between banking and technology to successfully transition the country into this new economic age. A prime reason why this group was formed.
“We don’t want to create another silo-type platform. What we want to do is to create a framework that can make various platforms mutually compatible.”
Japan are by no means alone with this announcement. Throughout the past year, the competition for digital currencies has risen, as multiple central banks issued plans to begin testing and developing their own Central Bank-issued Digital Currencies (CBDCs).