The craze of digital currency is increasing globally. Japan is planning to get its own Central Bank Digital Currency (CBDC) by 2022. While the country’s financial planners are already at it, according to a report from Reuters, the plans will take shape by the end of 2022.
The Bank of Japan (BOJ) already had a digital Yen pilot earlier in the year. Japan’s top banking authority is now working to launch the second phase which will see the testing of the protocols and analysing the feasibility and challenges with digital Yen. The BOJ is also exploring options to consider about the intermediaries who would be facilitating the transactions between the bank and the customers.
Hideki Murai of Japan’s ruling Liberal Democratic Party commented: “By around the end of next year, we’ll have a clearer view of what Japan’s CBDC would look like.” While politicians are not confirming if there is a concrete plan to launch a digital currency that’s underway, it is certain that the Japanese financial think tanks are preparing themselves to have a contingency plan and counter China’s advances in the field of digital money.
Commenting on if the country will soon have a CBDC, Murai said: “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.”
With cryptocurrencies gaining popularity and more and more younger investors favoring digital currencies over paper money, Japan is not alone in planning to launch a CBDC. Several other countries including the US have already been researching possibilities of having a centrally owned digital currency. In the US, they have not denied the possibility of a federal cryptocurrency.