Japan is nearing the launch of its CBDC, the digital yen, with the government and central bank laying the legislative groundwork for a rollout.
Neither the Bank of Japan (BoJ) nor the government has yet officially committed to a CBDC launch.
However, the BoJ has recently sped up the development of its digital yen, apparently concerned by the rate of China’s CBDC progress.
Per NHK, the Japanese government and the Bank of Japan this month held their first meeting on the CBDC’s “system design.”
The parties reportedly discussed “future points of contention” and discussed a range of CBDC-related “legal issues.”
Tokyo appears keen to build the legal framework for a digital yen launch well ahead of a rollout, to avoid legal obstacles further down the line.
The legislation will “assume the introduction of the digital yen.” The parties also spoke of making changes to the Bank of Japan Act, the Criminal Code, and the Civil Code.
The bank and the government hope to finalize the list of necessary legal amendments by “spring this year,” the outlet reported.
The Bank of Japan’s Osaka headquarters. (Source: Kakidai [CC BY-SA 4.0])
Will Japan Roll out a Digital Yen?
The Ministry of Finance held its most recent CBDC-related meeting in December last year. The ministry said that it discussed the “division of roles between the Bank of Japan and intermediary banks,” Japan’s CoinPost reported.
The BoJ says it wants domestic commercial banks to play a key role in digital yen issuance as part of a “two-tier structure.”
Banks will act as “intermediary institutions” that “stand between” the Bank of Japan and digital yen users.
The government and the BoJ plan to “consider ways of allowing private businesses to participate” in the digital yen project “while ensuring fair competition.”
Ministry officials and BoJ chiefs are thought to have discussed interoperability options between the CBDC and “other payment methods.”
They also spoke about “ensuring security” and the safe “handling of user information.” Possible “cross-border payment” options were also on the agenda.
Late last year, the payments giant MasterCard claimed that CBDCs were not yet ready for mainstream use.
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