Key takeaways:
- The Finance Ministry of Japan intends to convene an expert group the following month to examine the viability of issuing a digital yen.
- According to reports, the ministry’s panel will concentrate on creating a framework for a central bank digital money using a technical analysis done by the Bank of Japan.
According to Japanese news source NHK, Japan’s Finance Ministry intends to create an expert group in April to investigate the viability of introducing a digital yen.
According to the reports, the ministry’s panel will concentrate on developing a structure for a central bank digital currency (CBDC) and will be making use of a technical study carried out by the Bank of Japan (BOJ) over the previous two years. To prepare for the potential release of a digital yen, the ministry plans to use the recommendations from the expert panel and put them into practice.
The U.S. dollar, the yen, and the euro are a few examples of traditional currencies that are digitally reimagined and supported by central banks as CBDCs. The CBDC is a cryptographic asset that is issued by a central bank and functions in a centralized manner, in contrast to cryptocurrencies, which claim to be decentralized and unbacked by any central authority in contrast to the CBDC.
CBDCs are still in the early phases of development, but those opposed to the idea of central banks issuing their own digital money have voiced concern that this sort of technology would grant the banking system unprecedented authority over financial transactions. Furthermore, some people contend that conventional forms of payment suffice and that CBDCs are not required.
Despite these reservations, a number of central banks around the globe are looking into the possibility of issuing CBDCs, and discussion over their application is still ongoing. It has already been reported that several countries in Europe, China, India, and the U.S. are looking at the possibility of state-run digital currencies.
The Central Bank of the United Arab Emirates (CBUAE) is moving closer to launching its CBDC, also known as the digital dirham, entirely for both internal and international transactions. On March 23, the CBUAE revealed it had a contract in place with G42 Cloud and R3 to supply the necessary technology and infrastructure for the CBDC execution. The nation wants to transition to a cashless society, so in addition to tackling problems with payments, the digital dirham is anticipated to encourage financial inclusion.
