According to the Reuters report, Japan will have more clarity on what a digital yen would look like late next year, a lawmaker overseeing the ruling party’s digital currency plan said. Earlier, the Bank of Japan launched the first phase of its central bank digital currency (CBDC) experiment in April, joining counterparts aiming to ward off competition from decentralized and private cryptocurrencies.
Bank of Japan hopes to move to the second phase next year.
The Bank of Japan hopes to move to the second phase next year to lay out some key functions of a digital yen, such as which entities will serve as intermediaries between the central bank and deposit holders. “By around the end of next year, we’ll have a clearer view of what Japan’s CBDC would look like,” Hideki Murai, head of the ruling Liberal Democratic Party’s committee on digital currencies, told Reuters. He added that while no immediate decision will be made regarding issuing a CBDC, more details on its design could spark a debate on its effect on the financial institutions.
Japan joins other major economies in exploring a CBDC.
“If the BOJ were to issue CBDC, it would have a huge impact on financial institutions and Japan’s settlement system,” Murai further noted. “CBDC has the potential to completely reshape changes occurring in Japan’s financial industry.” Japan has joined other major central banks across countries in exploring a national digital currency. Hong Kong, USA, UK, China, and Canada are some of the countries experimenting with CBDCs. China is way ahead in the CBDC race as the Asian country has already conducted several successful pilots involving its digital yuan.