Japan's Central Bank Potentially Issues Digital Yen

Japan is studying CBDC. (Unsplash)

JAKARTA – The central bank of Japan (BOJ), the Bank of Japan, is reportedly developing the digital yen. To work on the digital money, they prefer to move closer to Sweden than to China, which has successfully implemented the use of digital money.

In recent years, a number of developed countries have begun to seriously explore central bank digital currencies (CBDC). This is aimed at stemming the rapid spread and adoption of cryptocurrencies. Cryptocurrency itself is considered to threaten the country's economic stability.

The Bank of Japan decided to follow Sweden's lead in exploring CBDCs. Even so, the BOJ has not yet decided on a detailed time regarding the launch of the digital Yen. However, the Japanese central bank only explained the time of its launch, possibly in 2026.

CryptoPotato reported that the BOJ considers its CBDC framework closely tied to the overall settlement system; thus, during its experimental phase, the central bank believed that one of the critical issues was ensuring compatibility with its financial infrastructure and other potential CBDCs.

Kazushige Kamiyama, head of the BOJ's payment systems department, said in an interview that the planned expansion of the Swedish experiment is more suitable than the Chinese approach, as reported by Bloomberg.

China is testing its CBDC at the Beijing Winter Olympics. This is aimed at encouraging massive adoption of the digital yuan.

Meanwhile, Sweden's Riksbank focuses on small-scale technical research. Its function is to check whether the CBDC can enter into the settlement system with other digital payment providers. As such, neither the Riksbank nor the BOJ have yet finalized a decision on whether to issue a digital currency or not.

Kamiyama added that developing countries, compared to developed countries, are more vulnerable to launching electronic money because of their relatively weak payment network.

As the second phase study of the digital Yen is set to launch this month, Kamiyama revealed that the next stage will be a small-scale trial. Japan seems reluctant to follow China's steps, which immediately tested the CBDC on a large scale.

Touching on the development of CBDCs, US Treasury Secretary Janet Yellen lauded CBDCs and stablecoins. According to Yellen, both have the opportunity to be adopted as a means of payment rather than Bitcoin (BTC). She views the unstable price of BTC as potentially being defeated by the CBDC released by the Fed.