Feasibility of Digital Japanese Yen: An Expert Meeting on CBDC

04/22/2023 03:36 • Tech Trends • 82 views

According to reports, the Japanese Ministry of Finance held its first expert meeting on the feasibility of issuing a legal tender in the form of electronic data, the “digital Japanese yen”, on the 21st, launching discussions on topics such as the annual summary. The Bank of Japan also began preparing for empirical experiments involving private financial institutions and others in April. This meeting is an expert meeting on CBDC (Central Bank Digital Currency). The government has not yet decided whether to introduce the digital yen and will use the conference report as future judgment material.

Japan’s Ministry of Finance Holds an Expert Meeting on Digital Japanese Yen

In recent years, the use of digital currencies has been on the rise. With the advancements in technology, more and more economies have been considering the adoption of central bank digital currencies (CBDCs). One such economy is Japan, which held its first expert meeting on the feasibility of issuing a legal tender in the form of electronic data, the “digital Japanese yen,” on the 21st of September. The meeting launched discussions on various topics, including the Bank of Japan’s preparation for empirical experiments involving private financial institutions and others.

What is CBDC?

Before diving into the subject of the feasibility of the digital Japanese yen, it’s essential to understand what CBDC is. CBDC is a digital form of central bank money issued in a state-guaranteed currency. In other words, it’s a digital version of traditional money or fiat currency that can be used as legal tender.

Japan’s Expert Meeting on Digital Japanese Yen

According to reports, the Japanese Ministry of Finance held its first expert meeting on CBDC on the 21st of September. The meeting aimed to discuss the feasibility of issuing a legal tender in the form of electronic data, also known as the digital Japanese yen. The government has not yet decided whether to introduce the digital yen and will use the conference report as future judgment material.

Bank of Japan’s Preparation for Empirical Experiments

The Bank of Japan has been preparing for empirical experiments involving private financial institutions and others since April 2021. The Bank plans to run a proof of concept (PoC) with the primary objective of testing the basic functions of CBDC, such as issuance, distribution, and redemption.

Feasibility of Digital Japanese Yen

The feasibility of the digital Japanese yen is being considered due to its potential benefits, such as reduced transaction costs, improved payment speed, and increased financial inclusion. Moreover, CBDCs can help facilitate the transition to cashless societies, reduce counterfeiting and money laundering, and enable more effective financial policies.
However, there are also potential risks associated with the introduction of digital currencies, such as cybersecurity threats, risks to financial stability, and the potential shift of bank depositors to CBDCs.

Global Adoption of CBDC

Japan is not the only economy considering the adoption of CBDC; many countries worldwide have been exploring the feasibility of digital currencies. One notable example is China, which has already begun the trial of its CBDC, the digital yuan.
Other nations such as the United States, the European Union, Canada, and Singapore have also announced their intentions to launch digital currencies.

Conclusion

As the world is becoming more digital, central banks worldwide are exploring the possibility of introducing CBDCs. Japan’s expert meeting on the feasibility of the digital Japanese yen highlights the country’s willingness to adopt digital currencies. However, as the risks associated with digital currencies cannot be overlooked, a cautious approach must be taken.

FAQs on Digital Japanese Yen

1. What is a CBDC?
CBDC is a digital form of central bank money issued by a state.
2. Why is Japan considering the introduction of digital yen?
Japan is considering the introduction of digital yen due to its potential benefits, such as reduced transaction costs, improved payment speed, and increased financial inclusion.
3. When did the Bank of Japan start preparing for empirical experiments involving private financial institutions and others?
The Bank of Japan began preparing for empirical experiments involving private financial institutions and others in April 2021.

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