The currency is not to meddle in private businesses and needs to work well together with its counterpart from other countries.
Plans for the Future
Countries everywhere are ramping up the discussion of their own central bank digital currency (CBDC) and Japan is the latest to go public with its plans for the future. Referred to as the digital yen, it has been the subject of a lot of recent conversations.
Oki Matsumoto, the head of Japan’s Monex Group, said at the end of 2020 that a Bank of Japan issued digital version of the yen would “significantly enhance the interoperability of cryptocurrencies.”
China Is the Frontrunner
It was only a couple of months ago that the U.S. Federal Reserve revealed its plan for a digital dollar prototype to be announced as early as this summer. Not surprisingly, China’s Central Bank digital currency is already steps ahead. As a matter of fact, Beijing and Suzhou railways just announced that they are accepting digital yuan as payment.
In order to not have to redo any of the work, Japan wants to make sure that their own CBDC is able to work well with digital currencies being developed by other countries.
Financial Players May Feel Some Impact
It is Japan’s ruling Liberal Democratic Party that voices its opinions on how they want to move forward. Hideki Murai, the party’s lead on digital currencies and a former member of Japan’s Ministry of Finance, wanted to clarify in an interview with Reuters that the digital yen would not meddle in private businesses.
“By around the end of next year, we’ll have a clearer view of what Japan’s CBDC would look like,” said Murai before continuing on how financial players may feel some impact from the digital yen.
“If the Bank Of Japan 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.”
To Work Closely With China
As Japan and China continue their close trade relationship, Murai also commented on how a relationship between the two CBDCs could look like.
“If a digital yuan becomes so convenient it’s frequently used by tourists or becomes a main settlement means for trade, the relationship between the yen and yuan could change.”
Bring Business Solution Back to the Banks
In contrast to what The Federal Reserve said about how an American CBDC could potentially pose a risk to the U.S. banking system, Murai had a different take on it. According to him, a digital yen could instead shift data and business solutions back into the Japanese banking system.
Only time will tell who’s right.