Some more clarity around Japan’s digital yen is expected by the end of 2022. This according to the head of Japan’s ruling party.
On Monday, Reuters reported that Hideki Murai of the Liberal Democratic Party said Japan is expected to soon have a “clearer view” of what their central bank digital currency (CBDC) could be looking like.
More details on the CBDC’s design may kickstart a debate on how its issuance could impact the country’s financial institutions. Officials are yet divided as some prevalent concerns run contrary to the bank’s conclusion that a digital yen would not adversely affect private businesses. That would be, provided they were designed appropriately.
The head of the Liberal Democatic Party, Murai believes that commercial banks would experience the positives from a shift back to the bank’s control over their customer business. He 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.”
In March, the Bank of Japan started the first phase of its central bank digital currency trials which will run up to March 2022. The trial came after the Bank of Japan published a paper in October 2020 outlining its preparedness for a CBDC trial.
China, in its efforts to digitize its national currency, has practically ended its trials and seem to be gradually rolling out the usage by making it available to increasing more people. China is targeting to have the CBDC in circulation by the Beijing Winter Olympics in Beijing February next year.
Commenting about the digital yuan earlier this year, the Bank of Japan said it does not see a threat to the U.S. dollar and its status as a global reserve currency. Murai had said:
“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”, according to Murai.
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