The Bank of Japan (BOJ) is set to begin experimenting with its central bank digital currency (CBDC) later this year. In the past, the central bank had said that it doesn’t intend to issue a digital yen, claiming that Japan’s digital payments are sufficient currently. Speaking at a recent news conference in Tokyo, BOJ Governor Haruhiko Kuroda stated the need for Japan to prepare thoroughly for a time in which it may need to issue a digital yen.
BOJ will not be issuing a CBDC any time soon.
The Bank of Japan’s governor revealed the state-backed digital currency later this year will allow the BOJ to stay in line with other central banks that have stepped up their CBDC efforts. “From the viewpoint of ensuring the stability and efficiency of the overall payment and settlement systems, it’s important to prepare thoroughly to respond to changes in circumstances in an appropriate manner,” he stated, as reported by Reuters. The governor, however, clarified that the BOJ would not be issuing a CBDC any time soon.
Several countries are actively exploring CBDCs.
The Bank of Japan’s experiment with CBDC will simply allow the bank to be better prepared if the need for a digital yen ever arises. Bank of Japan is striving to keep pace with its neighbor China, the global leader among major economies in the CBDC race. The People’s Bank of China has been conducting airdrops in major cities, including Shanghai, Suzhou, and Shenzhen, where citizens try out the digital yuan in retail payments. In its latest move, the PBoC joined forces with the UAE, Hong Kong, and Thailand in a CBDC research project. The project focuses on the use of a CBDC to ease costs and inefficiencies in cross-border funds transfers.