According to the Japan Today report, no single digital currency will dominate global transactions if central banks strive to enhance their own settlement systems, a senior Bank of Japan official (BoJ) said, brushing aside fears China’s rapid progress on a digital yuan could upend markets. The People’s Bank of China has publicly said it aims to become the first to issue a CBDC to reduce its dependence on the global dollar payment system.
China may have a “first-mover” advantage on issuing a digital currency.
In efforts to catch up with China and private projects such as Facebook’s plan to issue its own stablecoin, seven major central banks – including the BOJ – last week laid out key principles for issuing CBDCs. The central bank of Japan revealed that it would start experimenting with its CBDC next year. He further noted, “but new technology is invented all the time. Even if you’re ahead on the technology available now, you could get locked into what becomes old technology as time passes.” As with other central banks, the People’s Bank of China is likely developing a digital yuan mainly to create a stable, efficient settlement system, he added.
Bank of Japan to start experimenting with its CBDC next year.
As reported earlier, the Bank of Japan said that it would begin experimenting next year on how to operate its own central bank-backed digital currency. The move came in tandem with an announcement by a group of seven major central banks, including the Bank of Japan, on what they see as core features of a central bank digital currency (CBDC) such as resilience and a clear legal framework. The Bank of Japan said it would conduct the first phase of experiments on basic functions core to CBDCs, such as issuance and distribution, early in the fiscal year beginning in April 2021.
