Japan fast tracks digital currency development racing against China

Although Japan has in the recent past been one of the most crypto progressive nations in the world, especially in regard to regulation, it took step back on research and development of a sovereign digital currency. According to The Asahi Shimbun, local a news outlet, the Bank of Japan (BoJ) is preparing to commence substantive testing of a digital currency that could be released in future in the event China’s soon to launch digital yuan becomes a threat to national security.

A group of ten members was formed mid-July and is set to operate under the central bank’s Payment and Settlement Systems Department. The Group’s main task is to handle digital currency issues. According to BoJ’s Department Director, Takeshi Kimura, the task group will focus on central bank digital currency (CBDC) as a priority.

We will move forward with discussions while pushing up the level of consideration beyond the preparatory stage.

The starting date for testing is still unknown but Kimura added that the private sector will be consulted due to its in-depth technical knowledge in the area. Some of the essential characteristics the CBDC should exhibit are universal access just like the fiat currency as well as resiliency. The CBDC should have the capacity and robustness to be used even in times of crises, disasters and emergencies.

The digital currency will start seeing the light of the day in the economy at the time when there will be a decline in the circulation of the normal fiat currency. This will give pointers on when to roll out the digital currency.

The ruling party of the country, the Liberal Democratic Party has from time to time encouraged the government to look into the development of a digital currency because “having China with its hands first on the technological standards for CBDC could become a national security threat.”