Japan is seriously studying the issuance of a digital currency minted by the central bank. The research would have been initiated by the Ministry of Finance, the FSA (Financial Services Agency) and the Bank of Japan.
The Japan Times reports that it was the subject of a recent meeting of economic ministers of the G20 countries, which was held in Saudi Arabia.
The three Japanese authorities had met several times. The last time would have been last month. The meeting would have been attended by Deputy Minister Yoshiki Takeuchi, Ryozo Himino representing the FSA and Shinichi Uchida of Bank of Japan.
The three would have discussed the impact that a cryptocurrency issued by the central bank can have on the economy.
Japan would like to be ready, considering that the launch of digital state currencies now seems certain. China is ready and has already started the testing phase of its CBDC (Central Bank Digital Currency). The United States is also considering issuing a “digital dollar“. Europe raises doubts about this possibility, even though with Christine Lagarde at the helm of the ECB there seems to have been an openness towards stablecoins.
In this international context, financial authorities in Japan are also evaluating costs and benefits. On the one hand, it is assumed that cross-border payments could be faster and cheaper. On the other, there are fears that digital currencies could be used for money laundering or other criminal activities.
Japan and the digital currency: challenges and fears
In any case, the path seems to have been mapped out and is almost a necessary response to what China will do. Just yesterday during the G20 finance ministers’ meeting, Minister Taro Aso expressed concern about the issue of China’s digital currency:
“There is a big risk in a central bank digital currency unless the regulation is well-sorted, I would say ‘hold on’ for the issuance of a government-backed digital currency, at least for now”.
For the Bank of Japan, and specifically for Masayoshi Amamiya, Japan must be ready:
“The speed of technical innovation is very fast. Depending on how things unfold in the world of settlement systems, public demand for CBDCs could soar in Japan. We must be prepared to respond if that happens”.
There is nothing definite at the moment, but it is likely that Japan, which has always been a leader in the field of blockchain and cryptocurrency, does not want to be left behind.