Japan’s digital currency will be created without global testing, following Sweden’s moderate model.
According to a representative of the Bank of Japan for the study of the digital yen, Japan’s digital currency is in the creation phase. The Bank of Japan will study issues development of central bank digital currency measured steps, as in Sweden. Rather than forge ahead with large-scale pilot tests like in China.
Japan’s digital currency will develop slowly
“The phased and planned expansion of Sweden’s experiments is better for us than China’s large-scale tests right from the start,” Kazushige Kamiyama, head of the Bank of Japan’s payments system division, said in an interview.
“The structure and development of a central bank digital currency should be defined as part of the overall settlement system for the future,” he added.
Kamiyama also said that research will continue in close cooperation with other major central banks. Including the Federal Reserve System and the European Central Bank.
The ECB assumes that the Bank of Japan intends to proceed cautiously with its research. In doing so, he plans to ensure compatibility with other potential CBDCs. And this is the most correct and optimal approach for the development of this technology at the current time.
How Sweden And China Developed Their Digital Currency
Since 2020, China has continuously launched large-scale pilot tests of the digital yuan. It is distributed to residents of a certain province and they can spend it in special shops. This is how the system is tested.
As a result, this year China has taken another step towards launching its digital currency. It was presented at the Winter Olympics in Beijing.
In turn, the Swedish Riksbank focused on technical research on a smaller scale. For example, they conducted an internal test this year to see if e-krona could fit in with other digital payment providers.
Like the Riksbank, the Bank of Japan has yet to decide whether it will issue CBDCs. Japan’s central bank says the decision is up to the public.
Also, for example, in Germany, there is not yet active work on the development of a central bank digital currency. Although this technology is in high demand and may be useful in the future.
Japan Digital Currency: Why Digital Payments Are The Future?
Kamiyama said that it is natural for emerging economies to be more enthusiastic about launching e-money than developed countries with well-established payment systems.
However, with the acceleration of cashless payments due to the pandemic and the great interest in alternative payment assets such as Bitcoin, a growing number of central banks are exploring the need for electronic money.
According to the Washington think tank Atlantic Council near 87 countries representing more than 90% of the global economy are exploring the possibilities of CBDC. This is more than double their number in 2020.
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