Japan’s plan to launch a digital yen is likely to come into sharper focus in late 2022, a lawmaker overseeing the ruling Liberal Democratic Party’s digital currency strategy has told Reuters.
Fast facts
- The Bank of Japan launched the first phase of a central bank digital currency experiment in April. It hopes to move to the second phase next year, laying out some key functions of a digital yen, such as which entities will serve as intermediaries between itself 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, who heads the LDP’s panel on digital currencies, told Reuters.
- In Japan, many non-bank retailers have started to offer means of online settlement. If Japan’s CBDC is designed to make commercial banks key intermediaries, that could direct business and data away from those platform providers and back to the banks, Murai said, which would have a huge impact on financial institutions.
- The lawmaker also said the BOJ had to ensure that a digital yen was compatible with CBDCs issued by other developed nations, in part due to China’s rapid development of a digital yuan.
- The latest signals from the central bank are slightly more positive on a digital yen following a period of uncertainty about a CBDC launch several months ago. Nevertheless, the country’s existing financial infrastructure and regulatory environment have been described as unfit for the issuance of a digital currency.