A consortium consisting of some of the largest companies in Japan plans to launch its own yen-backed digital currency in the coming fiscal year. The consortium, which includes the top four banks in the country, will commence trial in the coming months in what experts say could disrupt Japan’s central bank digital currency (CBDC) efforts.
The consortium is made up of 70 members, with Japan’s largest banks Mitsubishi UFJ Financial Group Inc., Mizuho Financial Group Inc., and Sumitomo Mitsui Financial Group Inc. as founding members. Other members include Japan Post Bank, East Japan Railway Co., Nippon Telegraph and Telephone Corp., and Kansai Electric Power Co Inc., Reuters reports. The diverse nature of the members will allow the group to test the currency’s use in various industries, from energy to retail.
The group has been reportedly meeting regularly as the members studied ways to build a common settlement infrastructure for digital payments.
Dubbed “DCJPY,” the new digital currency will be fully backed by bank deposits. It will use a common platform to speed up large-scale fund transfers among its members.
The consortium is being led by DeCurret, a Japanese digital currency exchange backed by the SBI Group, gaming giant Konami Holdings, and the three largest banks.
Member banks will be looking to the new digital currency to aid in their digitalization efforts. So far, all four have been on a digitalization campaign, to varying degrees of success, as they try to fend off competition from fast-rising digital financial platforms.
Their biggest rival is PayPay, a mobile payments platform launched by SoftBank Group and Yahoo Japan. Despite launching only three years ago, it now has 38 million users and is the largest mobile payments platform in the Japanese market.
The consortium’s efforts could have some significant impact on the efforts of the Bank of Japan (BOJ), which has been working on a digital yen for some time now. If the CBDC launches, the BOJ would require the cooperation of the largest banks to distribute it to the end-users.
However, Toshihide Endo, the former head of Japan’s Financial Services Agency, now a senior advisor for DeCurret exchange, believes there will be no conflict between the private currency and the CBDC.
“A digital currency system built on a bank deposit-backed common platform will fit the CBDC that could be planned and implemented in Japan,” he said.
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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