As per a report by Nikkei, the Japanese government is expected to include its accelerated Central bank digital currency in the formal economic plan.
The Japanese government has clearly stated that it will consider the CBDC plan, in cooperation with other countries, and is ready to include this consideration in the Hunebuto Plan. This plan is the basis of the country’s fiscal and economic policies. The news comes ten days after the central bank’s announcement of starting the digital Yen feasibility test from a very technical perspective.
There has been a swift turn around in attitudes recently. In July of 2019, the BoJ was resolute with their plans for not issuing any CBDC in the country. But, for quite some time, the Bank of Japan has been working on developing its own Central Bank Digital Currency and said that it would start experimenting the same very soon. This happened because Kozo Yamamoto, an LPD member of the House of Representatives, urged on the urgency of a national digital currency without which the Japanese Yen might lose its sovereignty.
However, no such timetable or format was released when the report for Technical Hurdles for CBDC stated that the BoJ would continue testing the digital Yen for feasibility from a technical perspective in collaboration with other country’s Central banks heading towards the same.
Through this decision, BoJ aims at curbing China’s CBDC development. The reports tell that China has been successfully testing its Digital Currency Electronic Payment (DCEP) or Digital Yuan across a wide range of government employees, civilians, and global organizations falling within the mainland. The Chinese central bank has kept the CBDC development plan the topmost priority to systematically promote the reforms in return systems and cash issuance.
The Proof of Concept decision of BoJ involves cooperation with other countries. Regarding this, previous announcements from February say that six countries came together to form a group and share experiences on the usage of Central Bank Digital Currency in their states. These significantly noticed banks were Bank of England, European Central Bank, Bank of Canada, Bank of Japan, Swiss National Bank, and the Sveriges Riksbank in Sweden. The participation of the Bank for International Settlements was also seen periodically.
Another significant factor was Japan’s requested support from the US Federal Reserve in standing against the Chinese Digital Yuan. Norihiro Nakayama, Japanese Vice-Minister of foreign affairs, said that the Federal Reserve would partner with the six central banks, including BoJ, for the study of Digital Currencies.
Amamiya, Deputy Governor of BoJ, said that the CBDC system can improve the interoperability between the different digital currencies available and remove the barriers on P2P transactions by enhancing the efficiency of payments. However, the final say about the issuing of CBDC rests with the Japanese government, and not with the Central Bank. If the decision is finalized in the cabinet, then Japan’s policy framework will make it an official basic government policy of economic and financial management.