Japan is to focus on developing a framework for a central bank digital currency based on a technical study carried out by the Bank of Japan over the past two years. Japan’s Finance Ministry is planning to establish an expert panel in April 2023 to explore the feasibility of introducing a digital yen.
A panel will focus on the creation of a framework for a central bank digital currency (CBDC) and will refer to a technical study conducted by the Bank of Japan (BOJ) over the past two years. Findings from the expert panel are to prepare for the possible issuance of a digital yen.
CBDCs are digital versions of traditional currencies such as the US dollar, yen and euro, issued and backed by central banks. Unlike cryptocurrencies, which purport to be decentralised and not backed by any government or central authority, CBDCs are issued by a central bank and operate within a centralised system.
Opponents of central bank issued digital currencies have expressed concern that this technology would give monetary authorities unprecedented control over financial transactions. Additionally, some people argue that CBDCs are unnecessary and that traditional forms of payment are sufficient.
Regardless of these concerns, many central banks worldwide are exploring the possibilities of issuing CBDCs.