Tag: yen

Bank of Japan Now Considers its CBDC Project a Top Priority

The Bank of Japan is reportedly expediting the development of its Central Bank Digital Currency (CBDC).

A top official of the Asian giant’s apex bank Takeshi Kimura confirmed this while speaking to Japanese news outlet The Asahi Shimbun. Takeshi said that the bank will begin substantive testing of its CBDC as pressure mounts following the fear of Beijing launching its digital Yuan which he said could pose a national security threat.

“Consideration of a central bank digital currency (CBDC) will be handled as one of the top priority issues within the BOJ, We will move forward with discussions while pushing up the level of consideration beyond the preparatory stage.” Takeshi told the news outlet.

While Japan has long been developing its CBDC, it has not shared a tangible roadmap towards the issuance of one, a position that is likely to change moving forward.

Recent Development in Japan’s CBDC Development

Earlier this month, the Japanese government said that its officials will continue to consider and discuss a CBDC in their official Honebuto Plan for Economic and Fiscal Revitalization. This move came a week after the Bank of Japan said that it will launch a Proof of Concept (PoC) test the technical application and feasibility of its proposed CBDC.

The Proof of Concept testing as gleaned from the words of Takeshi will be to ensure that the digital Yen has universal access similar to regular currency and to guarantee the availability of the asset should there be a natural disaster. These two major considerations must record adequate functionality before the digital currency will be fit for public release.

As a way to further accelerate the development and testing of the digital Yen, the Bank of Japan inaugurated a new research team to pilot the developmental process of the project. With these plethoras of development, no timeline has yet been given for the probable release of the CBDC, a common reality the project has in common with China’s digital Yuan.

Japan’s Major Banks Join Consortium of Private Firms to Launch Yen-Based Digital Currency

A consortium of 79 Japanese firms, including the country’s largest banks, have joined forces to participate in the trial and a potential launch of a new digital version of the Japanese Yen in fiscal 2022. 

Led by a startup, DeCurret cryptocurrency exchange, these private firms are developing a platform known as Digital Currency JPY (DCJPY) to ensure that bank deposits will back the digital currency; Hence the DCJPY will be a liability of each of the banks.  

The initiative seeks to launch a yen-based digital currency in fiscal 2022 after testing trials in the coming months.

Kazuhiro Tokita, chief executive of crypto exchange DeCurret, leading the consortium, talked about the development at a news conference on Wednesday, November 24. Tokita said that “the new digital currency, known as “DCJPY” will be backed by bank deposits and rely on a common platform to expedite large funds transfer and settlements among the participating firms.” 

DeCurrent is leading the consortium, which includes a wide variety of firms, including major Japanese banks such as Mitsubishi UFJ Financial Group, Mizuho Financial Group and Sumitomo Mitsui Financial Group, among many other financial services firms. Also, big industrial companies such as motor vehicles, electricity, telecoms companies such as (Mitsubishi Motors Corporation), Japan Post Bank Co Ltd., Nippon Telegraph and Telephone Corp, East Japan Railway Co and Kansai Electric Power Co Inc). Other firms are expected to participate in the experiments to examine the use of digital currency in industries ranging from retail to energy.

Since last year, the consortium has been meeting regularly to discuss ways of creating a new settlement platform for digital payments.

Toshihide Endo, a former head of Japan’s Financial Services Agency who is currently a special advisor to DeCurret, also talked at the conference and said: “A digital currency system built on a bank deposit-backed common platform will fit the CBDC that could be planned and implemented” in Japan.

The initiative by the consortium is part of the private sector to support the Bank of Japan’s ongoing experiment on official national CBDC. Government officials, including policymakers, have stated that they would work closely with the private sector if the BOJ were to issue a CBDC.

Digital Yen with Simple Design

The latest development by the consortium sends a signal that the private sector is embracing the use of blockchain-based payment systems.

In the few previous months, as reported by Blockchain.News, a senior central bank official, working for the Bank of Japan (BOJ), stated that any digital currency that the central bank plans to issue should have a simple design that private firms can use to develop financial and payments services for customers.

BOJ executive director Shinichi Uchida said in October that if the central bank were to decide on issuing the national digital currency, then such a CBDC needs to co-exist with private-sector payment services.

Uchida further stated that the government is collaborative enough. Therefore private firms are allowed to develop services that allow customers to use both CBDC and private payment means with a single wallet.

The BOJ recently set up a regular panel to exchange views with the private sector as part of efforts to ensure that any digital currency it issues does not stifle private innovation.

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