(Rejected Double up) Bank of Japan To Implement a PoC For Digital Yen
Godfrey Benjamin Jul 02, 2020 22:33
The Bank of Japan (BoJ) will be implementing a PoC to check the feasibility of the issuance of its digital yen
Japan’s Monetary authorities began considering the option of issuing a government backed Central Bank Digital Currency (CBDC) back in February. The Bank of Japan (BoJ) has started considering the feasibility of switching payment systems that will be accessible to all. In a report titled Technical Hurdles for CBDC, the Bank of Japan detailed its findings from research on a government backed digital currency. The apex bank believes the development of Central Bank Digital Currencies and its subsequent implementation comes with technical issues that must be adequately considered.
The technical issues identified by the BoJ with respect to CBDC has spurred the bank to reveal it would commence a Proof of Concept (PoC) process with the digital yen but the is yet to give a timetable. The Bank of Japan joins other Asian giants including China, and South Korea actively working on CBDC projects.
The Highlighted Technical Issues
As noted in the report, a major factor to note in the issuance of a CBDC is its universal access and continuous availability. On universal access, the Bank believes that a currency should be in a form that will make it accessible to all citizens. Developed as Japan is, only a record 65% of the populace have smartphones, a viable medium to have access to the digital currencies. Just like traditional Yen, the digital Yen cannot pose visible restrictions on the populace.
Once issued, the digital currency must be available at all times no matter the given circumstances. Just as the presence of war, natural disasters and power outages does not negatively affect the continuous supply of fiat Yen, the digital version cannot be an exception. In checking the feasibility of the proposed digital Yen, the Bank will design a Proof of Concept which it has said it will implement.
Japan’s Collaborations on CBDC
In a bid to curb the influence of China’s promising digital Yuan, Japan aims to collaborate with the United States Federal Reserve. Understanding the powers of the United States, Norihiro Nakayama, Japan’s Vice Minister for Foreign Affairs noted;
“We sense the digital yuan is a challenge to the existing global reserve currency system and currency hegemony. Without the US, we cannot counter China’s efforts to challenge the existing reserve currency and international settlement system.”
Image source: winkreport
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