More than a week ago, Japan’s central bank announced that it would begin testing its digital currency next year. This is coming a few months after the bank formed a new research team to accelerate its research on the feasibility of a digital currency in the country.
BOJ Needs Public Support
More reports surfaced that Japan has no immediate plans to launch a digital currency. However, a senior BOJ official in charge of looking into the possibility of launching a CBDC made a statement on the matter, Bloomberg reported.
According to Kazushige Kamiyama, head of the BOJ’s payment system department, the central bank has not decided whether or not to launch a digital yen. But he noted that they must first hear from Japan’s citizens and get their support before the BOJ can develop a CBDC.
“At the end of the day there’s no way we can proceed without gaining sufficient understanding from the Japanese public,” he said.
Central Banks Afraid of Bitcoin
Kamiyama further noted that if the BOJ finally decides to issue a CBDC in the future, the bank would need to ensure that the digital yen coexists with cash and other forms of payments to protect the existing monetary policy.
This corresponds with the recent report published by the Bank of International Settlements (BIS) in collaboration with seven other central banks.
As reported, central banks are afraid of a digital currency that would disrupt existing financial and monetary policies. Their major concern for launching a digital currency is because they dread the possible massive adoption of non-government-controlled currencies like Bitcoin and Facebook’s proposed Libra.
China Leading The Way
In the end, Kamiyama believes that the BOJ needs to deepen its research and move quickly like China’s central bank in issuing a digital currency.
“It’s not desirable if what China is doing becomes impossible to understand for us. We must diligently study,” he said.
The People’s Bank of China is already testing its digital currency on a small scale and even distributed $1.5 million worth of the digital yuan via airdrop to the Japanese public last week.
Meanwhile, in the United States, the Fed Chairman Jerome Powell said during a panel hosted by the International Monetary Fund (IMF) on Monday that it is more important for the US to focus on getting it right with the CBDC than being the first bank to issue one.