The Bank of Japan has tentatively outlined their plans for a central bank digital currency (CBDC), with the head of the ruling Liberal Democratic Party confirming that Japan would soon have a “clearer view” of what thor CBDC would look like in 2022.
Mr Hideki Murai, head of a panel on digital currencies, has commented on the status of Japan’s CBDC, providing more clarity on the timeframe for this:
"By around the end of next year, we'll have a clearer view of what Japan's CBDC would look like,"
Japan’s central bank began digital currency experiments in April of this year, focusing on the feasibility of a CBDC as well as planning a second stage that would assess the potential of more detailed functions.
At the time, BOJ executive director Mr Uchida stated that the bank would launch a pilot program if deemed necessary, however there were no current plans to issue a CBDC:
"While there is no change in the BOJ's stance it currently has no plan to issue CBDC, we believe initiating experiments at this stage is a necessary step.”
While Mr Murai was clear that Japan has no plans to release a digital currency any time soon, BOJ is looking into the implications of a CBDC, and how it could impact financial institutions in Japan:
"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."
A number of major central banks around the world have begun to launch CBDC pilots, with China leading the pack with its digital renminbi. BOJ is part of a group of major central banks that are looking into core features of CBDCs, including the U.S. Federal Reserve, and the European Central Bank.
The results of the investigation and groundwork conducted by these banks could lead to the creation of a clearer regulatory framework for countries with similar economic structures who wish to create a CBDC in the future.
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