Japan is watching China develop its digital central bank (CBDC) currency and does not want to be left behind. Bank of Japan proposes properties for digital yen.
How should digital yen look like?
While cryptocurrency users find their main advantages in decentralization, central authorities still overlook this aspect and compete for centralized solutions. Central bank digital currencies cannot be further from the original idea behind BTC. Nevertheless, many central banks believe that their creation is a good idea.
The release of the digital yuan in China, which will serve the local regime to restrict freedoms and strengthen surveillance, was not a sufficient warning for these efforts.
Hideki Murai, head of the panel of the ruling Liberal Democratic Party for digital currencies, said the Bank of Japan was still working to determine the key features of the digital yen. He said that defining what entities will serve as intermediaries between the central bank and the holders, and other functions for the digital yen will be addressed at least until the end of next year.
“By about the end of next year, we will have a clearer idea of what the Japanese CBDC will look like,” Murai said in an interview with Reuters on Friday.
Details of the Japanese CBDC
BoJ for the first time announced its plans for the development of the CBDC in October 2020. At that time, she stressed that the bank has not yet “He has no plan to issue a CBDC.” Central banka subsequently in April this year launched its first phase of CBDC pilot projects. The first phase focuses on developing a test environment and conducting experiments with CBDC’s basic payment, issuance, distribution and redemption functions.
“If the BoJ were issued by the CBDC, it would have a huge impact on financial institutions and the Japanese settlement system. The CBDC has the potential to completely reshape the changes taking place in the Japanese financial industry. “
He said that Murai provided that jthe apon financial sector is already undergoing significant changes. Non-banking companies are increasingly offering online settlement funds here. If digital were only designed to make commercial banks key intermediaries, this shift could be reversed, Murai noted.
The official added that the BoJ must ensure the compatibility of the digital yen with other global CBDCs in order to face China’s progress with its digital yuan.
Some observers believe that 2021 will be the year of the CBDC, and the Bank of Japan rather confirms this assumption. The bank points to the growing position of China’s digital currency and intends to address the issue of its own digital currency in the long run, which, according to it, could reverse the weakening position of financial institutions. Meanwhile, the number of BTC users reaches This year’s highs, even though the use of free currency is not only voluntary, unlike Fiat currencies, but at an early stage accepting cryptocurrencies can be challenging for many people.