- Bank of Japan (BoJ) has started experimenting with its CBDC, which could lead to an alternative to the conventional Japanese Yen.
- As of now, the Bank of Japan seems extremely serious about issuing a digital currency.
- BoJ has started devising Japan’s very first CBDC in collaboration with the US and other European countries.
Recently reported that the Bank of Japan (BoJ) has started experimenting with its Central Bank Digital Currency (CBDC), which could lead to an alternative to the conventional Japanese Yen. However, back then, the bank had not announced or confirmed the possibility of digital currency in the future. Furthermore, they agreed that they are exploring this sector.
Need To Change The Traditional Transaction Systems
However, as of now, the Bank of Japan seems extremely serious about issuing a digital currency. This is because the bank thinks that there is a need to ease the traditional payment systems. Hence it has started devising Japan’s very first CBDC in collaboration with the US and other European countries. Nikkei had reported that the government has plans of including the CBDC proposal to its policy framework. The inclusion of the CBDC to the government policy framework will make the issuance of digital currency official.
The CBDC Plan Needs To Overcome Difficulties Of Resilience and Access
As mentioned earlier, the Bank of Japan researching in the field of digital currency for quite some time. The Bank of Japan was checking the feasibility and the hurdles that would come in the establishment of the digital Yen. BoJ wanted to resolve the two limitations that were in the way of its CBDC: resilience and access. Resilience refers to the ability to deal with challenging situations, most commonly loss of power, and lost control over the IT systems. In such challenging calamities when systems will be if there is no access to currency, the meaning of setting a digital currency would fail.
BoJ Is Working With Major World Banks Since January
Bank of Japan has previously partnered with several big world banks in January to launch a full proof digital Yen. It includes the Bank of England, the Bank of Canada, the European Central Bank, Sveriges Riksbank, and the Swiss National Bank. However, the recent news of China’s CBDC may have had some influence over the Bank of Japan. Some people believe that China’s digital currency is a threat to the US Dollar. Many analysts in Japan had suggested that Japan may need assistance from the US to compete with China’s potential CBDC.