The Bank of Japan has outlined its plans for a central bank digital currency (CBDC), and the ruling Liberal Democratic Party chairman confirmed that Japan will soon have a “clearer view” of what CBDC will look like in 2022.
Hideki Murai, chair of a panel on digital currencies, commented on the status of Japan’s CBDC and provided more clarity on the time frame for it:
“Toward the end of next year, we will have a clearer view of what Japan’s CBDC will look like.”
The central bank of Japan began digital currency experiments in April of this year, focusing on the feasibility of a CBDC and planning a second phase that will assess the potential for more detailed functions.
At the time, BOJ executive director Uchida stated that the bank will launch a pilot program if deemed necessary, but there are no current plans to issue a CBDC:
“While there is no change in the BOJ’s stance, there are currently no plans to issue a CBDC, we believe initiating experiments at this stage is a necessary step.”
While Murai has made it clear that Japan has no plans to issue a digital currency anytime soon, the BOJ is exploring the effects of CBDC and how it might affect financial institutions in Japan:
“If the BOJ were to issue CBDC, it would have a huge impact on financial institutions and Japan’s payment system. The CBDC has the potential to completely reshape the changes taking place in Japan’s financial industry.”
A number of major central banks around the world have started experimenting with CBDC pilots, and China is leading the pack with its digital renminbi. The BOJ is part of a group of major central banks that are investigating the key features of CBDCs, including the US Federal Reserve and the European Central Bank.
The results of the investigation and infrastructure work carried out by these banks may lead to a clearer regulatory framework for countries with similar economic structures that wish to establish a CBDC in the future.