The Bank of Japan has revealed how it will approach the development and testing of the digital yen, according to a recent Bloomberg report.
Japan will follow Sweden, not China
The Bank of Japan (BOJ) has reportedly said it will follow in the footsteps of European country Sweden. The central bank also disclosed that the government is likely to come to a conclusion on the development and issuance of a CBDC by 2026.
In an interview reported by Bloomberg, the head of the BOJ’s payments system department, Kazushige Kamiyama, said Japan prefers Sweden’s plans to expand experiments to China’s. The BOJ has tied the CBDC framework closely to the settlement system. Accordingly, the main focus of the central bank would focus more on the compatibility of the digital yen with its existing financial system and other potential CBDCs.
China launched its large-scale pilot program for its digital yuan at the Beijing Winter Olympics, intending to push for greater adoption of the digital yuan. On the other hand, the Swedish Riksbank has taken a different approach by aiming for smaller-scale technical research for the CBDC review. The latter highlights the CBDC’s integration into the settlement system with other payment providers.
Given the relative weakness of their payment networks, emerging economies are more likely than industrialized economies to introduce e-money, according to Kamiyama. the second phase of digital yen research is expected to begin this month and will be a small-scale pilot test.
In December 2021, Japan’s new political leadership urged its financial bureaucrats to speed up the launch of its digital yen.
The central banks of countries like India, Koreaand The Philippines are also in the early stages of CBDC development. Japan was recently added to the list of countries recognizing the potential of CBDCs.