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.

Cryptos feed

Latest Crypto News

Latest Crypto News & Analysis

Editors’ Picks

Cardano Price Forecast: ADA targets 900% bull rally, but it must clear $0.33 first

Cardano had a significant rally towards $0.355 at the beginning of 2021. After a notable dip to $0.228, bulls bought it and managed to push Cardano price to $0.33 again before a small rejection.

More Cardano News

Ethereum price aims to flush out doubters before the ultimate breakout to $2,000

Ethereum bulls bought the dip on January 11, pushing the digital asset from a low of $915 towards $1,256. The smart-contracts giant has been outperforming Bitcoin in the past 24 hours despite the negativity seen on social media.

More Ethereum News

XLM Price Prediction: Stellar consolidates ahead of a 30% move

XLM price trades at $0.291 at the time of writing after a healthy consolidation after hitting a 2021-top at $0.411. There is a high chance that XLM is about to see a massive breakout or breakdown within the next 24 hours.

More XLM News

Bitcoin Weekly Forecast: BTC price faces extreme volatility ahead of a new all-time high

Bitcoin had a wild run this week, dropping from a high of $41,350 to a low of 30,420 in less than 48 hours. The panic sell-off was stopped on its tracks at the 26-EMA on the daily chart as bulls quickly bought the dip and created a V-Shape recovery pushing BTC towards $40,100 again. 

More Bitcoin News


Bitcoin Weekly Forecast: BTC price faces extreme volatility ahead of a new all-time high

Bitcoin had a wild run this week, dropping from a high of $41,350 to a low of 30,420 in less than 48 hours. 

Read the weekly forecast