The Bank of Japan (BoJ), Japan’s central bank, has declared that regulated stablecoins and an upcoming central bank digital currency (CBDC) can coexist, and it has also given the clearest hint to date that Japan will introduce a digital version of the yen.
This week, the Governor of the Bank of Japan, Haruhiko Kuroda, reportedly discussed the issues during a fintech symposium, as reported by the Japanese media outlet CoinPost.
Kuroda seemed to imply that it would be possible for certain stablecoins and a digital version of the yen to coexist in the Japanese economy. He discussed the possibility that such stablecoins might perform “normal payment functions” and also brought up the possibility that they could be used in the settlements market.
This week, the trust and banking branch of Mitsubishi UFJ Financial Group disclosed that it has begun working on a stablecoin interoperability platform for bank-issued coins that are tethered to fiat currency. The largest financial group in the country is known as Mitsubishi UFJ.
The Japanese government has granted the go-ahead to Japanese financial organizations to create yen-pegged tokens, and a number of Japanese banks have expressed an interest in entering this market in 2018.
Yet Kuroda gave the impression that he was suggesting that such coins, in addition to a CBDC, might both find a place in the Japanese digital economy. He discussed the possibility that such stablecoins might perform “normal payment functions” and also brought up the possibility that they could be used in the settlements market.
Additionally, Kuroda mentioned “technical advancements” that may soon enable Japanese companies to “employ stablecoins and [a] CBDC for cross-border transactions.”
He stated that doing so may possibly help “streamline the traditional banking system” in certain respects, and he referred to this as “streamlining the conventional banking system.”
Is Japan Set to Welcome a Digital Yen?
During the past two years, the Bank of Japan has been putting a significant amount of effort into developing a prototype digital yen. According to the opinions of several experts, the Bank of Japan and its counterpart in South Korea are both trying to catch up to China, which is currently extremely near to implementing its nationwide deployment.
Yet, up until very recently, the Bank of Japan’s position on the subject of the creation of a digital yen was one of relative non-committal. The BoJ has made it clear that its pilots are intended to serve just as experiments. In addition, it has stressed that the government and lawmakers will have the last word about the issuing of the licenses.
Yet, Kuroda stated last week at a symposium on financial technology that Japan will “need to achieve” a CBDC “in the future.” He also stated:
“I believe that [a digital yen] will be issued.”
The Governor was further detailed that beginning in early April, a new stage of the digital yen pilot program would be implemented.
According to statements made by the BoJ, the next phase of testing will involve the creation of an ecosystem that will integrate “central systems, intermediate networks, intermediary systems, and endpoint devices.”
The tests will also include participation from a number of companies from the private sector.
30 May 2023
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