The Bank of Japan (BOJ) will experiment with its central bank digital currency (CBDC) later this year, central bank governor Haruhiko Kuroda says
Bank of Japan Governor Haruhiko Kuroda said the top bank needs to be adequately prepared for when it should issue its CBDC. He said this during a seminar yesterday.
According to the Reuters report, Kuroda said the BOJ needs to issue its digital currency. He said this is the reason they would experiment with their CBDC before the end of the year. He said, “To ensure the stability and efficiency of the overall payment and settlement systems, it is important to thoroughly prepare to respond appropriately to changes in circumstances.”
Kuroda disclosed that the Bank of Japan has no immediate plans to issue CBDC. However, central banks may not wait until needs arise to begin developing digital currencies. His statements are consistent with those he said during a webinar last July.
The BOJ has been talking about developing its CBDC in recent months. In October, the central bank announced plans to experiment with operating a digital yen starting in 2021. Private financial institutions are leading the way in the innovation and development of digital currencies. The BOJ acknowledged that central banks are lagging and need to work together to bring private institutions into the digital currency space.
The BOJ will conduct the first phase of experiments on the basic functions of the CBDC later this year. It would focus on the issuance and distribution of digital currency. In January, Masayoshi Amamiya, the BOJ’s deputy governor, said the bank must be ready to meet public demand for CBDC in the country.
The Bank of Japan has been actively exploring digital currencies since 2019. For their part, several central banks around the world are actively researching or developing CBDCs. China is at the forefront of the most advanced countries in this area. They are already testing the digital yuan there to see how it would perform in the real world.