Bank of Japan will not rely on China for central bank digital currency research

  • The BOJ refuses to commit to the launch of a digital currency despite the trials scheduled for 2021.
  • A senior central bank official reckons that it is essential to understand CBDCs, not rely on China.

The Bank of Japan (BOJ) has been under pressure to announce a sovereign digital currency launch officially. However, the head of the central bank's payment system department Kazushige Kamiyama reckons that public support is required for such a move. The senior official made the remarks even after another announcement stated that the digital yen testing would commence in 2021.

There is no conclusion yet.

At the end of the day, there's no way we can proceed without gaining sufficient understanding from the Japanese public.

Kamiyama stressed that when the decision to launch a digital unit of the yen is finally made, its purpose would be to improve Japan's transaction ecosystem. Moreover, the digital yen will operate side by side with the fiat financial system. Other electronic systems already in place will also coexist with the digital currency.

The comments suggest that the BOJ is not in a hurry to launch a digital yen. However, the central bank wants to understand how a potential launch would impact the existing systems. Simultaneously, the regulator would like to ascertain the conditions that must be met before going forward.

We have clearly stated that banknotes and digital currency will coexist.

The digital currency won't be useful to deepen negative rates because there will be banknotes.

The progress China has made towards the launch of a digital yuan has sparked interest from central banks worldwide. Unfortunately, the digital currency ground is still relatively undiscovered and, therefore, not an easy path to walk. For this reason, regulators globally are approaching the matter with caution.

The International Monetary Fund (IMF) recently pledged its support in research surrounding central bank digital currencies (CBDCs). Nonetheless, the IMF reckoned that CBDCs are unlikely to solve all the challenges currently being faced.

The United States Federal Reserve Chair, Jerome Powell, also said in a virtual conference with the IMF that the Fed would rather get it right than be the first. The US central bank has been under pressure to make public plans for a digital currency from some legislators and leaders in fintech, who believe the country is falling far behind China.

Kamiyama added that extensive research is the only way to understand the digital currency ecosystem. The study is critical to the Japanese central bank as, according to the BOJ official, "it is not desirable that what China is doing becomes impossible to understand for us."

Meanwhile, the use of digital payments has been accentuated by the coronavirus pandemic, which continues to cause havoc to the standard way of life worldwide. Less cash is being utilized globally as a way of protection from the novel virus.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Cryptos feed

Latest Crypto News

Latest Crypto News & Analysis

Editors’ Picks

Cardano partners with Chainlink to drive smart contract development for DeFi applications

Cardano recently announced a strategic partnership with decentralized blockchain oracle network Chainlink. The third-generation blockchain is preparing to build smart contracts for decentralized finance (DeFi) applications.

More Cardano news

Huobi to stop servicing Chinese users as China vows strict crackdown on crypto

A few months after the cryptocurrency mining ban in China, the country issued another update last week, reiterating that digital assets are banned and crypto exchanges are prohibited. Shortly after the announcement was revealed, Bitcoin and altcoins plunged.

More Cryptocurrencies news

Ethereum bears contemplate a drop to $2450

ETH price is building up downside pressure while clinging to the 200-SMA support. RSI remains flat below the midline, keeping the sellers cheerful. A drop towards $2450 remains in the offing if the 200-SMA caves in.

More Ethereum News

Polkadot price at make-or-break point

Polkadot price spots a potential symmetric triangle pattern on the 1D chart. RSI stands neutral at 50.00, suggesting a lack of clear directional bias. 21-DMA offers immediate resistance.

More Polkadot News


Bitcoin Weekly Forecast: Markets revert to mean, but BTC price remains indecisive

Bitcoin price shows considerable strength after springing from the recent crashes. Still, it is uncertain whether the current bullish impulse will morph into a new uptrend or lead to a more profound decline.

Read the weekly forecast