Japan’s Plans Include A Digital Yen In ‘2 To 3’ Years

While China continues to pull ahead and lead the Asian region in terms of cryptocurrency regulation, Japan is apparently inspired by the country and wants to get in the race, too. New reports show that Japan’s plans for a new national cryptocurrency are more and more obvious and over the past weeks, many lawmakers expressed their preference for a CBDC controlled by the Bank of Japan.

The general idea now, as the cryptocurrency news show, is to counter the digital yuan from neighbouring China which is set to be released soon – and prevent it from disrupting the global economy.

A senior ruling party lawmaker confirmed Japan’s plans and said that the development of a Japanese CBDC might take “two to three years.” The big question many are asking now is – will this come too late as a challenge to Beijing?

Anyways, what is important is that the Bank of Japan’s relationship with CBDCs can be traced back to April 2018 when the agency’s deputy Governor Masayoshi Amamiya first addressed the topic to the public. Japan’s plans were then outlined and even though the tone of his comment was predominantly negative, the official did not rule out the possibility of a native cryptocurrency to the bank.

Amamiya then argued that issuing a CBDC for general use would undermine the existing financial system. Such cryptocurrency regulation, according to him, would also allow customers to open accounts directly at the central bank and abandon private banks altogether, putting them at a major disadvantage:

“The issuance of central bank digital currencies for general use could be analogous to allowing households and firms to directly have accounts in the central bank. This may have a large impact on the aforementioned two-tiered currency system and private banks’ financial intermediation.”

Japan’s plans may change in the near future and although the bank was not considering issuing its own digital currency, it certainly realized that the application of emerging technologies was a possibility.

Half a year later (October 2018) Amamiya panned the idea of CBDCs and said that Japan’s plans may change once interest rates fall to zero – which is when central banks may use these. Then, in February 2019, the Bank of Japan published a report covering CBDCs. And now (January 30 2020) Amamiya continued the discussion, confirming Japan’s plans and stating that the central bank must be ready to issue a CBDC if public demand spikes due to rapid technical developments.
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