To counter China’s central bank digital currency or CBDC, Japan’s new administration has urged its financial bureaucrats to ramp up efforts towards issuing its own digital yen. A minister of the newly created portfolio of Economic security, Takayuki Kobayashi has stressed to speed up the process in issuing CBDC and went on to term the matter to be a ”national security” level.
While the political efforts have been limited to rhetoric, the Central Bank of Japan [BOJ] is already facing the heat due to its “cautious, baby-step approach” toward issuing the digital yen. As a global front-runner, China has already run a few tests for a possible launch of a digital yuan by 2022.
In contrast to that, BOJ has only kickstarted the first phase of its experiment in April and clarified that it has no immediate plans to issue a CBDC. Besides it categorically said that ‘pilot programs, if any, won’t take place until 2023 at the earliest.’ Now that lackluster stance might see its end as Prime Minister Fumio Kishida has shown serious interest in issues concerning CBDC.
Japan’s CBDC- The journey ahead
Officials at BOJ reassured that China’s plan won’t directly impact the deadline for their CBDC experiments as the main aim of issuing a digital yen is to provide secured, efficient payment and settlement means to the citizens. Sources familiar with the issue, however, sound skeptical and wondered how quickly the Central bank can match up with its European and U.S. counterparts to announce plans for issuing the digital currency.
That being said, the debate over issuing a digital yen might escalate next year as Kishida’s administration lays out plans detailing its economic security roadmap against the backdrop of China’s recent promotion of its digital yuan at the Beijing Winter Olympic Games in February.
A former BOJ board member Takahide Kiuchi said,
It’s clear Kishida’s administration and his ruling party are keen on issuing a digital yen. If China launches a digital yuan next year and Europe’s central bank announces plans to issue a digital euro, that will have a huge impact on Japan and pile pressure on the BOJ.