According to a government official, Japan will have a clearer view of how a digital yen could function next year.
Hideki Murai, the head of the Liberal Democratic Party’s panel on virtual currencies in Japan, believes that the country will have a better idea of how a CBDC will affect Japan’s economy in 2022. He also thinks that a central bank digital currency will probably cause a debate between exchange platforms and traditional institutions.
“By around the end of next year, we’ll have a clearer view of what Japan’s CBDC would look like.”Hideki Murai, the head of the Liberal Democratic Party’s panel on virtual currencies
The central bank of Japan initiated the first phase of a digital yen trial back in April. The second phase is expected to start next year, and it will explore some of the key fundamentals behind a CBDC. It is yet to be understood how such an asset will affect the Japanese economy and which institutions will serve as a bridge between citizens and the bank.
“If the BOJ were to issue CBDC, it would have a huge impact on financial institutions and Japan’s settlement system. CBDC has the potential to completely reshape changes occurring in Japan’s financial industry.”Hideki Murai, the head of the Liberal Democratic Party’s panel on virtual currencies
The Bank of Japan is part of seven major central banks that are exploring the ecosystem of CBDCs through several trials. The digital yen will be compatible with them partly to counter the rapid progress of China towards issuing a digital yuan.
“If a digital yuan becomes so convenient it’s frequently used by tourists or becomes a main settlement means for trade, the relationship between the yen and yuan could change.”Hideki Murai, the head of the Liberal Democratic Party’s panel on virtual currencies
Nations all over the world have been exploring the subject. The Bank of England has taken a similar step as well in April, creating a Taskforce to explore the possibility of establishing a digital pound. Asia is certainly forward when it comes to CBDCs. Banks in Cambodia, China, or Thailand are already testing them.