Japan’s new political leadership urges the country’s financial bureaucrats to speed up the issuance of a digital yen.
The Japanese government has increased its staff
Reportedly, China’s proactive approach to developing, testing, and deploying its CBDC has startled many nations, including Japan. China’s activities are viewed as a potential challenge to the global economic order. As a result, the Japanese government has increased its staff to study the legal and technical aspects of issuing a central bank digital currency to get ahead of the competition. Like most central banks around the world, however, the Bank of Japan has so far held back.
The Bank of Japan only began the first phase of its experiment in April and said it had no immediate plans to issue a digital yen. Pilot programs will not happen until 2023 at the earliest, if ever. The BoJ felt China’s plan would not directly affect Japan’s CBDC experiment timeline. Still, some influential ruling party lawmakers see China’s progress on the CBDC as a potential threat to the dollar’s status as a global reserve currency and the financial dominance of Washington, one of Japan’s biggest allies.
A consortium of private firms plan to launch a digital yen
What could also play a role in the government’s decision is that a consortium of about 70 Japanese companies, including the country’s three megabanks, has said it plans to launch a yen-based digital currency in fiscal 2022. The consortium is led by DeCurret, a Japanese digital currency exchange backed by SBI Group, gaming giant Konami Holdings, and the three largest banks. It has been reported that the consortium’s efforts could have a significant impact on the efforts of the Bank of Japan.
However, Toshihide Endo, the former head of Japan’s Financial Services Agency and current advisor to DeCurret exchange, believes there will be no conflict between private currency and the CBDC. “A digital currency system built on a bank deposit-backed common platform will fit the CBDC that could be planned and implemented in Japan,” he said.