Every country’s governments and financial institutions are making solid attempts at jumping on the central bank digital currency (CBDC) bandwagon, and Japan is no exception. Despite a lacklustre response to the creation of a digital yen late last year, Japan has returned to the course of digital currency innovation as the Bank of Japan takes on the challenge of designing, researching and testing a possible CBDC, but Japan’s private sector is not intending to sit still and wait for the bank to introduce it.
According to Reuters, a consortium of private banks and other companies and institutions have joined hands to develop and experiment with a “common, private” digital yen in 2021, alongside a public digital currency as would be issued from the Bank of Japan. The organization consists of more than 30 companies, including brokerages, telecommunications businesses, retailers and even utility firms as these entities come together to accelerate innovation in the finance and payments sector.
Japanese society is still very much reliant on physical cash, as compared to others, but despite this, it is still necessary to move forward with a digital currency. Hiromi Yamaoka, an executive who previously worked in the Bank of Japan, says that they are looking to create a one-stop platform that enhances interoperability with several other digital platforms, rather than introduce another “silo-type” product.
In other countries, the public and private sector delineation has been made exceedingly clear when it comes to CBDC development. For example, the US Federal Reserve went on record to say that the private sector has no place in interfering with the design, development or issuance of a digital USD.
This announcement came shortly after several private financial companies in the US pushed out a comprehensive Digital Dollar whitepaper for consideration. Ironically, despite making this declaration, the US Fed has not been making much progress on this front while it continues to reassure the public that the agency is on top of developments in this area.
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