Bank of Japan forms new committee to coordinate CBDC efforts

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The Bank of Japan (BoJ) has formed a new committee whose mandate will be coordinating its central bank digital currency (CBDC) efforts. The new committee brings together the Japanese and international banking community, securities dealers, payments associations and the fintech community.

Called the Liaison and Coordination Committee, the group will focus on facilitating smooth implementation of the proof of concept (PoC) for the central bank-backed digital currency. It will also be in charge of sharing details and providing updates on the proof of concept with the private sector and the government.

Some of its members will include The Japanese Bankers Association, International Bankers Association of Japan, National Association of Labor Banks, Japan Securities Dealers Association, Japan Payment Service Association, and Fintech Association of Japan.

The committee will meet regularly—online for the time being due to COVID-19 restrictions—and upon discussing the BoJ’s progress with the CBDC PoC, it will communicate the same to the general public. Its secretariat has been established in the Payments and Settlement Systems Department of the BoJ.

The new committee comes just days after the BoJ revealed that it was eyeing CBDC experiments this year. As CoinGeek reported, the BoJ governor stressed that this wasn’t an indicator that the bank would issue a digital yen. Rather, “from the viewpoint of ensuring the stability and efficiency of the overall payment and settlement systems, the Bank will prepare thoroughly, including implementing experiments, to respond to changes in circumstances in an appropriate manner.”

Governor Haruhiko Kuroda stressed further the need for caution in CBDC developments in a recent speech. He believes that a digital yen could disrupt the stability and efficiency of the overall payments and settlement systems if not properly developed and implemented.

He stated, “Amid significant changes that are occurring with the advent of the digital society, we will take this opportunity to carefully consider the way in which we should provide central bank money.”

While Japan exercises caution, its neighbor China is in high gear in its digital yuan development and testing. In its latest airdrop, the People’s Bank of China gave away $4.5 million worth of its digital currency in Suzhou city. This was the second giveaway in the city, with the PBoC having distributed $3 million in December. Insiders say that the bank is targeting a 2022 launch for the digital yuan, in time for the Beijing Winter Olympics. This would give the PBoC a global audience to test its CBDC, possibly making it more appealing as an international digital payments instrument.

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.

See also: CoinGeek Live panel, The Future of Banking, Financial Products & Blockchain