Japan entered the CBDC race when officially testing the digital yen

Japan entered the CBDC race when officially testing the digital yen


2021-03-27 02:16:47

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As central bank digital currencies gain momentum across Asia, Japan is now in the race.

In the first quarter of 2021, Japan’s central bank – even while showing uncertainty as to whether Japan really needs CBDCs – will begin to run tests on the digital yen. .

“Central banks share the view that it is not the right thing to initiate CBDC considerations only when there is a future need to issue CBDCs,” Bank of Japan Governor Haruhiko Kuroda said in a statement. keynote speech at the FIN / SUM 2021 conference this week.

While the Bank of Japan currently has no plans to issue CBDCs, Japanese officials believe it would be wise if things are ready. Governor Kuroda said: “From the point of view of ensuring the stability and efficiency of the overall payment and settlement system, we believe that it is important to be well prepared to respond to changes in circumstances. appropriately.”

Besides this, interest in CBDCs is growing around the world, with central banks shifting from exploratory research to testing or proof-of-concept.

A recent survey of 65 central banks by the Bank for International Settlements found that 86% are investigating the issuance of CBDCs and about 60% are working on proof of concept.

“For the Bank [Nhật Bản]Given the dramatic changes underway with the advent of digital society, we will take this opportunity to carefully consider how we should fund the central bank, “The Governor said.

Last October, the Bank of Japan announced the CBDC approach and announced its intention to test the feasibility of CBDC core functions for “general purpose”.

As part of phase 1, starting at this point, the Central Bank of Japan will develop a testing environment for the CBDC system and conduct testing of the core basic functions of CBDC as a public employee. payment instrument – issuance, distribution and redemption.

Japan has also conducted joint research with the European Central Bank on distributed ledger technology (DLT) for financial market infrastructure in the Stella Project since 2016.

In other countries in Asia, CBDC research – for public and financial market use – has been achieving rapid success.

China, the fastest-moving country in the field, has been conducting mass tests of its DCEP digital yuan for personal use. Although an official launch date has yet to be announced, many analysts believe it could be imminent.

In Korea, Shinhan Bank, one of the oldest banks here, recently announced that it has been piloting a blockchain-based CBDC platform with LG Corp, a stepping stone to prepare for a CBDC. potential issued by Bank of Korea.

Last month, the central banks of China, Hong Kong, Thailand and the United Arab Emirates announced that they were collaborating on a project called “Multiple CBDC Bridge” for payments. cross the border.

Earlier this month, the Central Bank of Thailand (BoT) announced that it had successfully completed a project of exploiting and using CBDCs for payment and settlement among businesses. BoT plans to focus on retail research and development in the period 2021-2022.

The Monetary Authority of Singapore last year announced the end of the fifth and final phase of Project Ubin initiated in 2016 to explore the use of blockchain and DLT to settle payments and stock.

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