Bank of Japan and Government Meet to Discuss Digital Currency
The Bank of Japan (BoJ) recently held its first official meeting with the Japanese government to discuss the possibility of launching a central bank digital currency (CBDC), commonly called digital yen. As reported by NHK, a local TV channel, the meeting on January 26 focused on resolving legal issues surrounding the issuance of a digital yen, aiming for a resolution by spring 2024.
Neither the BoJ nor the government has officially decided to launch the digital yen. Any decision on this will be made only after a national discussion, which is not expected to happen before 2026.
In December 2023, the Ministry of Finance’s expert panel recommended that BoJ issue a digital yen “without delay.” The report emphasized that digital currency should coexist with cash and suggested minimizing the storage of personal data by the BoJ.
The BoJ completed the second phase of its CBDC testing in May 2023. This year-long test involved 100,000 users and five intermediaries, handling up to 3,000 transactions per second. Following this successful experiment, the BoJ is moving towards a pilot project to examine the complete process flow and integration with external systems.
Despite Japan being known as a cash-based society, it has shown a positive attitude towards CBDCs. This contrasts with the United States, where some lawmakers and presidential candidates oppose CBDCs. However, Japan’s interest in CBDCs doesn’t mean it’s against cryptocurrencies. Starting in April 2024, local businesses in Japan might be exempt from taxes on unrealized gains from cryptocurrency holdings.
Several Asian countries are exploring CBDCs. China is already implementing its digital yuan, while Hong Kong, Singapore, Malaysia, India, and South Korea are researching it. The National Bank of Cambodia also announced plans to introduce a CBDC by the end of 2024.
