As competition for digital currencies heats up, the government of Japan is considering establishing a commission to investigate the viability of a digital version of the yen.
According to recent reports, the Ministry of Finance is contemplating the possibility of forming an expert panel in April to investigate whether it would be possible to issue digital yen.
There have been plenty of trials and errors concerning the distribution of digital currency ever since the Bank of Japan initiated research on CBDC in the year 2020.
Suppose a preliminary test of the digital currency issued by the central bank is successful. In that case, the government anticipates immediately implementing the currency.
Japan Releases Digital Yen Panel
Reports indicate that the primary objective of the panel discussing the digital yen will be establishing a foundation for a digital currency.
The results of the proof-of-concept trials that the BOJ has been doing for over two years will serve as the foundation for the framework that will be developed. Officials from the central bank have stated that there are currently no specific preparations in place.
This project aims to create a system that will allow for the distribution of the anticipated digital currency.
In April, not only is there a proposal for the establishment of a panel, but in the same month, the Japanese government is also planning to launch a pilot program for the digital yen.
This occurs after the first part of the proof-of-concept test, which is designed to determine whether or not the CBDC is physically feasible.
In April 2021, the first step of the process got underway, with the central bank constructing an experimental environment centered on a CBDC ledger. Also, it validated the fundamental operations associated with the currency, such as the issue, payout, and transfer of funds.
The second proof of concept proved the initial stage’s main tasks as well as new and more complicated ones. During this phase, the technical feasibility & processing capabilities of the digital yen were also studied.
Plan of Japan’s Digital Yen
The Bank of Japan plans to continue its experiments throughout the following month, which coincides with the panel development and digital yen pilot program. Shinichi Uchida, who is the executive director of the central bank, said (1) the following:
“The purpose of the pilot scheme is two-fold: first, to test the technical viability that the Pos does not completely cover; and second, to utilize the expertise and expertise of private enterprises in regard to technology and procedure for the goal of creating a CBDC ecosystem in the potential situation that it will be put into social implementation.”
A leadership shift at the Bank of Japan is another event anticipated to occur in April. The present governor of the bank, Haruhiko Kuroda, will step down from his position in April when his second tenure as governor of the bank’s last five years comes to an end.
It is widely anticipated that Kazuo Ueda will take his place as the governor of the nation’s central banks.
Before releasing the digital yen, the executive director may have promised a number of steps, and the panel may be one of them.
To ensure widespread acceptance, he said, “if a CBDC is going to be published in the future, investigating its framework in such a stepwise manner and engaging in very transparent dialogue with the corporate sector are vital steps to take.”
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