The Bank of Japan will proceed with caution when it comes to the digital yen, preferring Sweden’s approach to China’s rapid development of experimentation.
Central bank digital money has caught the curiosity of both industrialized and developing countries in recent years (CBDC).
The Bank of Japan recently adopted a cautious approach to the digital Yen, claiming that it will follow the same developmental path as Sweden.
According to BOJ, the final decision on whether or not to issue CBDC is likely to be made by 2026.
Planned development of trials is more appropriate than China’s
The framework of the BOJ’s CBDC is tightly linked to the whole settlement system; as a result, the central bank feels that one of the most important challenges to address during its experimental phases is ensuring compatibility with its financial infrastructure.
According to Bloomberg, Kazushige Kamiyama, the chairman of the BOJ payment system section, stated in an interview that Sweden’s staged and planned development of trials is more appropriate than China’s.
China conducted a large-scale pilot test of its digital currency at the Beijing Winter Olympics earlier this year, with the goal of encouraging wider acceptance of the digital yuan.
Meanwhile, the Riksbank of Sweden has concentrated on a smaller-scale technological study to see if its CBDC could work with other digital payment providers in a settlement system. As a result, neither the Riksbank nor the Bank of Japan has made a judgment on whether or not to issue digital currencies.
Due to the relative fragility of their payment networks, emerging economies are more likely than industrialized economies to introduce electronic money, according to Kamiyama.
The second phase of digital Yen research is set to begin this month, and Kamiyama has stated that the next step will be a small-scale pilot test.
US Treasury Secretary supports CBDC
US Treasury Secretary Janet Yellen stated in a recent address dedicated only to cryptocurrencies that a CBDC and other stable coins might reach greater adoption as a means of payment than Bitcoin.
Because of Bitcoin’s price volatility, she hinted that the Fed-issued digital currency may outcompete it as a means of exchange.
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Source: https://www.thecoinrepublic.com/2022/04/21/japans-central-bank-boj-is-cautious-about-digital-yen/