The three largest banks in Japan will set up a study group to examine the benefits of building a common settlement infrastructure for digital payments. Local cryptocurrency exchange DeCurret will organize the group and the meetings, which should take place twice per month.
Japan’s Largest Banks Look At Digital Currencies
According to the recent report from the New York Times, the core banks in question behind the study group are Mitsubishi UFJ Financial Group Inc, Mizuho Financial Group Inc, and Sumitomo Mitsui Financial Group Inc. East Japan Railway and several other non-financial firms are also planning to participate.
DeCurret will serve as the group’s organizer. Officials from the exchange noted that representatives from the Bank of Japan, the Ministry of Finance, and the Financial Services Agency will attend the meetings as observers. The group will meet twice a month from June through September 2020.
The paper states that the Japanese are among the most cash-using population in the world, typically conducting everyday transactions with notes and coins. Local authorities have been attempting to reduce this trend and instead promote cashless transactions, especially after the outbreak of the COVID-19 pandemic.
Japan already has numerous digital payment systems, but citizens are refraining from employing them fully. Hence, they are “yet to overwhelm the usage of cash,” said Hiromi Yamaoka, a former central bank executive who will chair the group.
Yamaoka also added that the group will search for other solutions, as one of them “could be to enhance the inter-operability of digital currencies and infrastructure.”
Japan’s Controversial Views Regarding CBDCs
While nations like China are increasing their efforts to release a central bank digital currency (CBDC), Japan’s actions have been somewhat controversial.
Firstly, reports indicated that the country’s most prominent financial authorities held an undisclosed number of meetings to discuss the potential merits and drawbacks of such digital currency.
They concluded that a CBDC could strengthen Japan’s online presence due to lower costs for cross-border financial transactions and more effortless access if they manage to reduce the risk of possible illegal usage.
Contrary, Deputy Governor of the Bank of Japan argued that CBDCs could benefit developing countries but are unnecessary for advanced economies such as Japan:
“At this point, there is no need to implement new steps to ensure people’s access to central bank money. Moreover, the currency systems and the payment and settlement systems of these economies are operating safely and stably. They cannot simply jump into new technologies, or actually, they should not.” – he said during a speech at the Future of Payments Forum in Tokyo.