Japan Central Bank has conducted its first official meeting with the government to discuss central bank digital currency (CBDC) matters. According to local TV channel NHK, on January 26, the government and the Bank of Japan (BoJ) agreed to address legal issues concerning the launch of the digital yen in the second quarter of 2024.
The Digital Yen Process in Japan
The news report clarified that neither the Japan Central Bank nor the government has officially confirmed the release of the digital yen. Any decision will be made following a national debate and not before 2026.
In December 2023, the Japan Central Bank received a report from an expert panel at the Ministry of Finance, urgently recommending the issuance of a digital yen. The report stated that the CBDC should coexist with cash and that the Japan Central Bank should minimize personal data storage.
The Japan Central Bank completed the second phase of a year-long CBDC test in May 2023, which involved five intermediaries and 100,000 users at a load of 500 to 3,000 transactions per second. Following this step, the experiment was declared successful, and the central bank moved on to the planned CBDC pilot project, which requires examining end-to-end process flows and further connections with external systems.
CBDC Projects and Government Attitudes
Despite its reputation as a cash-based society, Japan continues to maintain a positive stance towards CBDCs, while in the US, legislators and presidential candidates continue to show significant opposition to CBDCs. However, the Japan Central Bank’s pro-CBDC attitude indicates positive views towards the crypto market. From April 2024, local businesses may be exempt from taxes on unrealized gains from crypto assets.
Asia continues to be more open to CBDC projects; China is already gradually implementing its digital yuan, while Hong Kong, Singapore, Malaysia, India, and South Korea continue their research on CBDC projects. At the beginning of January, the National Bank of Cambodia announced that it would implement a CBDC in the country by the end of 2024. The bank made the following statement:
“The introduction of Lanka Pay and Central Bank Digital Currencies has already begun.”