Japanese Citizen Support Is Crucial For Digital Yen

By Ray Crawford·26 October 2020·1 min read

Key Points

The Bank of Japan won't launch a digital currency without public support.
The BoJ announced last week that it would test a CBDC in 2021 and has formed a team to evaluate whether the project is feasibl

The Bank of Japan won't launch a digital currency without public support. The BoJ announced last week that it would test a CBDC in 2021 and has formed a team to evaluate whether the project is feasible. Kazushige Kamiyama, who oversees payment systems at the bank, said the BoJ must first hear from Japanese citizens and secure their backing before any digital yen development begins. The bank has not yet committed to moving forward with the initiative.

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A digital currency developed by the BoJ would need to operate alongside paper money and the existing payment systems in use across Japan, Kamiyama explained. Japan is not rushing forward, even as other countries race to develop digital currencies.

Central banks worldwide are pursuing CBDCs because they fear Bitcoin. In early October, the Bank for International Settlements published a report outlining why: Bitcoin could destabilize the financial systems and monetary policies that central banks have constructed and maintain. The BoJ's measured approach reflects this same concern about cryptocurrency disruption.

The Bahamas deployed its Sand Dollar last week, becoming the first nation to launch a CBDC beyond the test phase. China is building the regulatory framework for digital yuan adoption. The United States lags behind both nations. Federal Reserve Chairman Jerome Powell told delegates at an International Monetary Fund conference that America should focus on building a CBDC that works properly rather than competing to launch first.

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