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Japan will set up a panel to explore the feasibility of a digital yen as it edges closer to launching its own central bank digital currency (CBDC).
The new panel will be set up by the Ministry of Finance and is expected to launch in April, local broadcaster NHK reports, citing unnamed sources. Reuters confirmed the scoop, citing its own sources who say the panel “will be in line with the pledge made in the policy platform.”
This medium-term policy was announced in 2021, and a CBDC was one of its provisions. The Bank of Japan (BoJ) has since been conducting feasibility tests, ending the initial phase of experiments in March this year.
Finance Minister Shunichi Suzuki told reporters this week that the government is committed to exploring a digital yen. Days earlier, BoJ Governor Haruhiko Kuroda said he believes the central bank should issue a CBDC.
“Ensuring the coexistence of CBDC with various other forms of money…is something that we need to and will in fact achieve in the future,” he said.
The new panel will be charged with discussing how to design an institutional ecosystem to support the digital yen, based on the two-year study by the central bank. The Japanese government will then rely on the findings of the panel to weigh the feasibility of the CBDC.
BoJ has not conclusively indicated that it intends to issue a digital yen. Like most of its peers, including the U.S. Federal Reserve and the Bank of England, it has maintained that it’s only conducting feasibility studies to be ready if it decides to issue the CBDC.
Starting in April, the bank will begin field tests for the digital yen, working with commercial banks to identify any glitches in the issuance and redeeming of the CBDC.
Several central banks are advancing their CBDC trials and studies. In March, the United Arab Emirates (UAE) announced mBridge integration for its upcoming digital dirham; German and Italian banks expressed support for a digital euro; 1.3-billion-user WeChat integrated digital yuan; and Iran entered the digital rial pilot phase.
As other countries march on, the U.S. seems to be moving in the opposite direction, with influential Florida Governor Ron DeSantis saying the digital dollar isn’t welcome in his state. Senator Ted Cruz followed the governor’s anti-CBDC campaign with a bill blocking the Fed from creating a digital dollar.
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.
Watch: CBDCs and BSV
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