The Governor of the Bank of Japan (BoJ), Haruhiko Kuroda has reiterated how essential it is for the apex bank to collaborate with the United States Federal Reserve, as well as the European Central Bank (ECB) in creating a global standard for the issuance of a Central Bank Digital Currencies (CBDCs).
As reported by Reuters, Haruhiko told the Japanese Parliament that the Bank of Japan has not made any decision on whether to issue its own Digital Yen, however, it noted that it was proceeding with experiments and a plan to deliberate on specific designs of one.
It is no news that tens of nations around the world are exploring the creation of their own digital currency, mostly with the goal of stemming the competition to sovereign payment systems that are being posed by Bitcoin (BTC), stablecoins, and other privately issued tokens.
While the Bank of Japan has been researching the emergence of its CBDC for quite some time now, Haruhiko said the final decisions on whether to float one can only be made after full consultation has been made between all relevant stakeholders including the BOJ, as well as government and private entities.
When asked by a lawmaker whether the BOJ will be ready to launch the Digital Yen by 2026, Haruhiko responded by saying “Personally, I think that’s the case,” adding that “What’s most important is for the idea to get sufficient understanding by the public.”
BOJ and the Race for CBDCs: a Necessity for Central Banks
In today’s global financial ecosystem, the use of physical cash is declining at an arguably fast pace as digital payment systems are gradually taking the center stage. Physical cash presents a lot of problems ranging from environmental to increased costs of production, seeing most are often worn out with usage over time.
Going by these obvious antagonistic forces, developing a digital version of their currencies has come off as a major avenue for Central Banks to innovate and ease the burden off their payment ecosystem. While many monetary authorities developing their CBDCs are doing so with the aim of making both the fiat and digital monies co-exist, the move is expected to be one of the most pervasive trends around the world in the next decade.
With just a few countries including the Bahamas and Nigeria known to have a functional CBDC in circulation, countries like China are at their advanced retail testing stages with plans to make their e-CNY available for use at the forthcoming winter Olympic games.