Japan is poised to step up its efforts to develop a central bank digital currency (CBDC) after appointing its top economist to lead the initiative. The country has been conducting research into the feasibility of a digital yen since January.
The Bank of Japan appointed Kazushige Kamiyama to head its payments and settlement department. This department has been overseeing digital currencies in the country, including the CBDC research.
As per a Reuters report, Kamiyama is one of Japan’s top economists and has been hugely influential in the digitization efforts undertaken by the Bank of Japan. Kamiyama spearheaded the bank’s efforts to use big data in real-time economic research and analysis. This approach enabled the central bank to navigate the effects of the coronavirus pandemic on the economy.
Kamiyama’s appointment represents a shift in Japan’s approach to the digital yen, the report claims. The Bank of Japan has in previous years taken a cautious approach to the CBDC, claiming that it didn’t assess a need for a digital yen in the market just yet.
However, this year, the central bank has stepped up its efforts. Starting in January, it has been conducting extensive research into the feasibility of a digital yen. Two weeks ago, it set up a research team to look into the CBDC, citing the rise in demand for cashless payments.
Developing a CBDC has become the Bank of Japan’s biggest priority. As CoinGeek reported, one of the central bank’s directors revealed recently that the regulator is working on regulations which could be on an upcoming legislative program. These regulations would pave the way for a more drastic approach to the development of a digital yen.
For Japan, a CBDC symbolizes a shift towards digital payments in a country that has always embraced cash payments. Despite being one of the global leaders in technology, Japan has lagged behind its Western and Asian peers in adopting digital payments. At a time when other Asian giants such as South Korea and China have gone cashless, 80% of transactions in Japan involve cash.
However, with China leading in CBDC efforts, Japan is quickly putting measures in place to ensure it doesn’t risk falling behind in the global economy.
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.
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