The Bank of Japan (BoJ) recently held its inaugural official meeting with the Japanese government to deliberate the potential development of a central bank digital currency (CBDC).
Reports from local TV channel NHK reveal that on January 26, both the government and the BoJ reached a consensus to address the legal intricacies associated with the issuance of a digital yen, with the goal of resolving these issues in the spring of 2024.
It is important to note that neither the BoJ nor the government has formally confirmed the launch of a digital yen at this point.
A definitive decision will only be made following a “national discussion,” and not before 2026.
In December 2023, the BoJ received a recommendation from an expert panel within the Ministry of Finance to expedite the issuance of a digital yen.
The panel emphasized the importance of the CBDC coexisting alongside physical cash and underscored the need for the BoJ to minimize the storage of personal data.
The BoJ successfully concluded the second phase of CBDC testing in May 2023.
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This year-long experiment involved 100,000 users and included the participation of five intermediaries, with transaction loads ranging from 500 to 3,000 transactions per second.
Following this achievement, the BoJ initiated its scheduled CBDC pilot project, focusing on evaluating the “end-to-end process flow” and establishing connections with external systems.
Despite Japan’s reputation as a predominantly cash-based society, the country maintains a favorable stance toward CBDCs.
This contrasts with the United States, where lawmakers and presidential candidates have actively opposed CBDC initiatives.
Furthermore, starting in April 2024, Japanese businesses may no longer be subject to taxes on “unrealized gains” from cryptocurrency holdings.
In Asia, there is a growing openness to CBDCs, with China already implementing its digital yuan, while countries such as Hong Kong, Singapore, Malaysia, India, and South Korea are actively researching CBDCs.
Additionally, in early January, the National Bank of Cambodia announced its intentions to introduce a CBDC in the country by the end of 2024.
The bank revealed its ongoing efforts to introduce “Lanka Pay” and “Central Bank Digital Currencies.”
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