The Japanese Ministry of Finance has announced plans to form an expert panel to investigate the feasibility of issuing a digital yen. According to local media NHK, the panel will be organized next month to discuss ways to establish a central bank digital currency (CBDC) framework based on research conducted by the Bank of Japan over the past two years.
The move by Japan is not surprising, as other major economies such as China, the European Union, and the United States are also exploring the possibility of launching CBDCs. China has already begun expanding its pilot use of the digital yuan in the private sector, while the US published its first digital dollar report last year, and the EU is set to decide whether to issue a digital euro this year.
Although the Bank of Japan has been researching CBDCs for the past two years, the ministry has stressed that there is currently no specific issuance plan for the digital yen. Nevertheless, the formation of the expert panel shows that Japan is seriously considering the possibility of launching its own digital currency.
In addition to the expert panel, the Bank of Japan is set to enter the digital yen pilot phase involving financial institutions and private companies. This is a crucial step towards testing the digital yen’s viability and user-friendliness, as well as identifying potential legal and framework issues that may need to be addressed before actual issuance.
The digital yen is not only expected to enhance Japan’s payment and settlement systems but also help the country keep pace with the digital currency developments being made by its global counterparts. It is important to note, however, that the issuance of CBDCs can have far-reaching economic and financial implications, and Japan’s policymakers will need to weigh these carefully before making any concrete decisions.
While it may take some time before Japan can fully resolve the legal and framework issues involved in issuing a digital yen, the formation of the expert panel and the launch of the digital yen pilot phase indicate that Japan is moving forward with its plans to join the global trend towards CBDCs. It will be interesting to see how Japan’s plans for a digital yen unfold in the coming months and how they will be received by the country’s citizens and the wider international community.
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