According to a senior Bank of Japan official, the launch of the digital yen will depend on public support.
Kazushige Kamiyama, Head of the Bank of Japan Payments and Settlements Department, said that the final decision on the launch was not made even after the announcement of the start of digital currency testing in 2021.
„There are no conclusions yet,“ said Kamiyama. „After all, we will not be able to continue without sufficient understanding from the Japanese public.
He added that if the Bank of Japan releases the digital yen in the future, the project will aim to improve the transaction ecosystem and coexist with cash and other forms of electronic payments. Kamiyama said that the BitQT would not become a monetary policy tool.
Comments indicate that while the issue of digital currency is in question, the Bank of Japan is seeking to broaden its understanding of how it will work and what conditions need to be met to continue the launch of the CBDC.
China’s plans to release the digital yuan, although not implemented, have increased global interest in digital currencies among central banks and policymakers. Discussions about planned sticklercoins, such as Libra on Facebook, have reinforced the sense that traditional money has a growing number of competitors that can have a significant impact on the financial sector.
This month, the G7 Finance Ministers, the International Monetary Fund and the Bank for International Settlements published reports and statements on this topic. Federal Reserve Chairman Jerome Powell said this week that about 80% of central banks are studying the idea of issuing CBDC.
According to Kamiyama, the Bank of Japan is continuing its research in an effort to improve the efficiency of national payment systems rather than to strengthen monetary policy. He also notes that the bank has no plans to replace the fiat as digital currency will only strengthen the transaction ecosystem.
„We have clearly stated that banknotes and digital currency will coexist,“ said Kamiyama. „Digital currency will not be useful to increase negative rates because there will be banknotes to which they do not apply.
According to the bank representative, even financial companies could play an intermediary role in increasing access to the digital yen. In his opinion, it should be discussed whether these companies should have accounts with the Bank of Japan.
Kamiyama also added that the Bank of Japan should keep up with the People’s Bank of China to become the first major central bank to issue digital currency.
Earlier in October, the Bank of Japan announced its plans to test the technical feasibility of the key functions and features required for the CBDC using Proof of Concept.
The official statement said that the government would also consider the need for a pilot programme if necessary. Although the bank has no plans to roll out its own CBDC, it plans to prepare carefully „to respond appropriately to changing circumstances“.