Japanese yen’s digital plan to become clearer in late 2022, ruling party official says
TOKYO, July 5 (Reuters) – Japan will have more clarity on what a digital yen would look like at the end of next year, said a lawmaker overseeing the ruling party’s digital currency plan, potentially starting a war of territory between traditional lenders and online platform operators.
The Bank of Japan launched the first phase of its central bank digital currency (CBDC) experiment in April, joining its counterparts aiming to keep pace with the rapid pace of private innovation.
It hopes to move to phase two next year to define some key functions of a digital yen, such as the entities that will act as intermediaries between the BOJ and deposit holders.
“By the end of next year, we will have a clearer picture of what Japan’s CBDC would look like,” Hideki Murai, who heads the ruling Liberal Democratic Party’s panel on Friday, told Reuters on Friday. digital currencies.
While no immediate decision is made on whether to issue a CBDC, more details on its design could spark debate on how issuing CBDCs might affect financial institutions, he said. .
This could test the BOJ’s argument that a digital yen will not crowd out or interfere with private companies, Murai said.
Japan’s financial industry is already facing massive changes as non-bank retailers begin to offer various means of online settlement, venturing into commercial bank territory.
If the CBDC is designed in a way that makes commercial banks key intermediaries, it could shift the business and data from those platform providers to banks, Murai said.
“If the BOJ were to issue CBDC, it would have a huge impact on financial institutions and Japan’s settlement system,” Murai said. “The CBDC has the potential to completely reshape the changes taking place in Japan’s financial industry.”
Murai also said the BOJ must ensure that a digital yen is made compatible with the CBDCs of other developed countries, in part to counter China’s rapid progress towards issuing a digital yuan.
The BOJ is one of a group of seven major central banks that are jointly reviewing the main characteristics of CBDCs.
“If a digital yuan becomes so convenient that it is frequently used by tourists or becomes a primary means of settlement for trade, the relationship between the yen and the yuan could change” and erode the yen’s status as a safe haven currency , said Murai.
Reporting by Leika Kihara and Kentaro Sugiyama; Editing by Sam Holmes
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