Future of Digital Yen to Gain Clarity in 2022; CBDC Has Potential to Reshape Japan’s Financial Industry
Japan's Central Bank could issue its central bank digital currency (CBDC) by the end of next year.
This was made known by Hideki Murai, who runs the Liberal Democratic Party's panel on cryptos. Murai believes the country would have a clearer picture of what to expect concerning a digital yen by 2022, Reuters reports.
How CBDC Would Affect Financial Institutions
The lawmaker said there is no immediate decision regarding the issuance of a CBDC.
“If the BOJ 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.”
Murai also spoke on issues concerning whether the digital yen will supersede or interfere with private business when issued.
The country’s financial industry is already facing major changes. This is because non-bank retailers are venturing into the turf of commercial banks by offering various online settlement services.
Murai said that if CBDC is designed in a way that makes banks key intermediaries, this could shift business and data away from such retailers back to the banks.
Away from internal issues, Murai noted that the Bank of Japan should ensure that the digital yen is compatible with CBDCs of other developed countries. This is to ensure it can compete with China's digital yuan.
Bank Of Japan Trailing Behind China
Although several Central banks have hastened efforts to develop CBDCs in their various countries, China remains at the forefront.
The People's Bank of China is currently launching trials across the country as it accelerates efforts to digitize its national currency. China expects to have its CBDC in circulation to an extent by the time the Winter Olympics in Beijing comes in February next year.
The Bank of Japan (BOJ), on the other hand, only began its CBDC project a few months ago. The bank introduced a liaison and coordination committee focused on CBDC in March. In April this year, it began the first phase of CBDC experiments with the second phase scheduled for next year.
The Bank of Japan had previously stressed its unreadiness in issuing a CBDC. However, this latest statement from a public official suggests the bank’s willingness to pursue a CBDC issuance sooner.
Murai’s comment also comes after former top Japanese financial regulator Toshihide Endo said when China launches its CBDC proper, negative perceptions around digital currencies will change.
According to him, China's progress in issuing its digital yuan will push advanced economies into following suit.