Japan abandons plans to launch CBDC due to lack of citizen interest

Many countries around the world, including Brazil, are advancing in the studies and launches of their central bank digital currencies (CBDC). The idea of ​​digitizing money seems interesting since, today, almost everything is already in the digital environment.

However, in some regions, CBDCs are not attracting public interest. This is the case with Japan, which recently abandoned its plans to launch a national digital currency.

According to the local portal Asia Times, the Japanese see more benefits in using physical money rather than digital.

Japan will not launch CBDC in the near future

As reported by the portal, the Bank of Japan (the country’s central bank) began its experiments involving a CBDC in 2021. The testing phase began in April 2022. Despite this, the central bank should not implement a CBDC in a near future.

That’s because the Japanese public already has virtual access to the banking system. Therefore, the issue of promoting financial inclusion through the CBDC has never been an important issue, as it is in the case of other countries.

In addition, the central bank stated that the use of digital and mobile technologies by the private sector in the payment of goods and services is also now widespread.

Also according to the Bank of Japan, the CBDC idea did not receive significant support due to the fact that the Japanese already have access to internet banking, credit card and e-money payment solutions.

Added to this are the advantages that citizens have when using services offered by the private sector. This includes, for example, the system of points that can be earned with payments and that can be accumulated and used for purchases.

Physical money > digital money

The report by Sayuri Shirai, a professor at Keio University and a former member of the policy board of the Bank of Japan, also states that physical money is more useful than digital in many ways.

For example: it is most useful in natural disaster or military conflict scenarios; when there is a lack of energy, destruction of assets or lack of confidence in the banking system of the private sector. In addition, seniors and low-income people also prefer physical money over digital.

“While the increasing use of digital payments is a growing trend, money is likely to remain in use in many economies. Central banks consider it important to retain cash in the economy, despite the higher cost of handling cash and the risk of cash-related crimes,” she said.

Finally, the report points out that the central bank of Japan should continue to accumulate knowledge related to technology blockchain. This is to ensure financial stability and financial innovation in the country.

Also, considering the efficiency of international payments using a CBDC, it would be a promising choice due to the high cost of existing banking services.