The Government of Japan is set to include the central bank digital currency (CBDC) in its official economic plan. The Bank of Japan (BOJ) has announced earlier that it will begin testing the digital yen to determine its viability from a technical point of view. Reuters reported today that the bank said it had set up a new team, to take a closer look at the central bank digital currencies
As well as this announcement of a new team, it was also stated that this team will be in charge of joint research into digital currency. It will be done along with other large banks including the Bank of England and the European Central Bank.
The review of the CBDC will be included in the Honebuto Economic and Fiscal Revitalization Plan. In particular, the Honebuto Plan is the foundation of the economic and fiscal policy of the Asian countries. The earlier report points out that Japan will consider a digital yen while coordinating with other nations
Japan’s central bank digital currency
The Japanese government stepped up its CBDC efforts immediately after China started testing its digital yuan. Last July, the Japanese central bank maintained that it had no plans to issue a CBDC. However, things seem to have turned quickly. The Bank of Japan, although it maintains that it does not have immediate plans to issue them.
The Bank of Japan has been researching digital currencies for a while now. Notably, the central bank has recently embarked on the offline use of the digital yen as it seeks to satisfy the two key features of digital currencies: resilience and universal access. According to a research paper shared by the BoJ, Japan faces unique challenges such as earthquakes and blackouts that require offline use of the CBDC.
Moreover, only 20% of the country’s total payments are digital, as most people prefer fiat payments. Although Japan is a technologically advanced nation, the country’s use of smartphones stands at only 65 percent. In conclusion, all of these factors point to the need for the digital currency of Japan’s central bank to be used offline.