Japan Prepares for Launch of Digital Yen
Japan is getting closer to launching its central bank digital currency (CBDC), known as the digital yen. The government and the Bank of Japan are working on the legislative groundwork for the rollout, although no official commitment has been made yet.
The Bank of Japan has recently accelerated the development of the digital yen, possibly due to concerns about China’s progress with its CBDC.
In their first meeting on the CBDC’s system design, the Japanese government and the Bank of Japan discussed future points of contention and legal issues related to the digital yen. They aim to establish a legal framework well in advance to avoid obstacles later on.
The necessary legal amendments are expected to be finalized by spring this year.
Will Japan Launch a Digital Yen?
In December last year, the Ministry of Finance held a meeting on CBDC-related matters. The division of roles between the Bank of Japan and intermediary banks was discussed.
The Bank of Japan proposes a two-tier structure for digital yen issuance, with domestic commercial banks playing a key role as intermediary institutions.
The government and the Bank of Japan also plan to explore ways to involve private businesses in the digital yen project while ensuring fair competition. Interoperability with other payment methods, security, user information handling, and cross-border payment options were among the topics discussed.
MasterCard previously stated that CBDCs are not yet ready for mainstream use.
Hot Take: Japan’s Digital Yen Progresses Amid Global CBDC Race
Japan is making significant strides towards launching its own central bank digital currency, the digital yen. With concerns about China’s progress in developing its CBDC, Japan is speeding up its efforts to establish a legal framework and prepare for a digital yen rollout. The government and the Bank of Japan have held meetings to discuss the system design, legal issues, and future challenges related to the digital yen. They aim to make necessary legal amendments by spring this year. Japan also plans to involve commercial banks and explore opportunities for private businesses to participate in the digital yen project. As countries around the world race to develop their CBDCs, Japan is positioning itself as a key player in the global CBDC race.
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