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Bank of Japan to Move to Second Phase of Digital Yen Project

While the BOJ had made no decision yet whether to issue its own digital currency, its governor told parliament it was proceeding with experiments


weak yen
Furusawa said the speed of yen moves, rather than the currency's level, were more important for policymakers in deciding whether to intervene in the market. Photo: AFP.

 

The Bank of Japan said on Friday it would move to the second phase of its experiment on issuing a central bank digital currency (CBDC) from April.

The move was widely expected, as the BOJ had said it would do that after completing the first phase of its CBDC experiment, which was launched last April.

“The Bank of Japan has been conducting experiments since April 2021 to test the technical feasibility of the core functions and features required for [a CBDC],” the central bank said in a statement.

“In April 2022, the bank will move on to … Phase 2, in which it will implement various additional functions of the CBDC in the test environment developed in Phase 1 and investigate their feasibility, as well as challenges.”

While the BOJ had made no decision yet whether to issue its own digital currency, central bank governor Haruhiko Kuroda told parliament in January it was proceeding with experiments and a plan to deliberate on specific designs.

Last October, the BOJ published its approach to a “general purpose” CBDC – that is, a CBDC intended for a wide range of end users, including individuals and companies, while stressing that the bank “currently has no plan to issue a CBDC”.

The bank said it would be unlikely that cash in circulation would drop significantly in coming years.

“If, however, this should become the case, and if private digital money will not substitute for the functions of cash sufficiently, the bank might provide a general purpose CBDC as a payment instrument alongside cash.”

 

  • George Russell

 

 

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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.

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