Hideki Murai, the head of the ruling Liberal Democratic Party’s digital currency group, believes that by the end of next year, Japan will have a clearer idea of what a digital yen might look like.
According to a report published by Reuters, the Bank of Japan (BOJ) started its first phase of a central bank digital currency (CBDC) trial in April, joining a group of peers attempting to keep up with fast industry innovation.
Next year, it aims to move on to the second phase, which would define certain essential tasks of a digital yen, such as which firms will act as middlemen between the BOJ and deposit holders.
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Murai said commercial banks would stand to benefit from a shift back to the bank’s control over customer data and business.
If the BOJ were to issue CBDC, it would have a huge impact on financial institutions and Japan’s settlement system, CBDC has the potential to completely reshape changes occurring in Japan’s financial industry.
Murai also stated that the BOJ must guarantee that a digital yen is compatible with the CBDCs of other industrialized countries, in part to counterbalance China‘s quick progress in releasing a digital yuan. The BOJ is part of a group of seven major central banks studying CBDCs’ key characteristics.
In March, the Bank of Japan established a liaison and coordination group in preparation for an April initial experiment or proof-of-concept phase. While the central bank stated that it was not yet ready to adopt a CBDC, recent statements from a government official show that the subject is being pursued further.
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