Japan’s ruling LDP preparations for law amendment to central bank digital currency (CBDC)

According to a report from the Nikkei newspaper, Japan’s ruling Liberal Democratic Party (LDP) has announced an “interim report” of recommendations to the government by the end of the year. In order to accelerate the introduction of the central bank digital currency (CBDC).

Prime Minister and President of the Liberal Democratic Party, Yoshihide Suga

The government and the Bank of Japan were urged to prepare for the revision of related laws. The Party also called for the enactment of the “Economic Security Package Promotion Law,” which incorporates the perspective of economic security into the national strategy.

Back in January 2020, the Bank of Japan announced that it has established a research team to look at issuing a central bank digital currency (CBDC) primarily from key central banks. Aside from the Bank of Japan, five other banks, including the Bank of Canada, Bank of England, European Central Bank, Sveriges Riksbank (Swedish Central Bank), and Swiss National Bank, are members of the Bank for International Settlements, which has established a group for the purpose of sharing knowledge and research on CBDCs.

Of the major central banks, China’s has emerged as the frontrunner in the drive to create its own digitized money, though details of its project are still scarce.

Some Japanese lawmakers have voiced concern over Beijing’s move as an attempt to expand the yuan’s use as a settlement currency in emerging economies.

Former BOJ board member Takahide Kiuchi, however, said China and Japan have different reasons to consider issuing digital currencies.

For China, the motivation is to enhance the yuan’s clout in the global community; for Japan, it would be to change the country’s cash-loving culture, he said.

“The BOJ probably won’t want to do anything that would stifle private-sector innovation. The best way could be to issue a hybrid-type digital currency that is operated and issued by private firms, with the central bank’s involvement,” he said.

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