Update: This article has been updated to reflect that Japan plans to resolve CBDC issuance legalities by Q2 2024.
The Bank of Japan (BoJ) held its first official meeting with the country’s government to discuss a central bank digital currency (CBDC). According to the local TV channel NHK, on Jan. 26, the government and the BoJ agreed to resolve the legal issues related to issuing digital yen in the spring of 2024.
The report mentioned that neither the BoJ nor the government have officially confirmed the launch of the digital yen. Any decision will be taken after “a national discussion” no sooner than 2026.
In December 2023, the BoJ received a report from an expert panel in the Ministry of Finance recommending issuing a digital yen “without delay.” The report stated that the CBDC should coexist with cash and that the BoJ must minimize personal data storage.
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The BoJ concluded the second phase of CBDC testing in May 2023, which ran for a year and included 100,000 users with five intermediaries at loads of 500 and 3,000 transactions per second. The experiment was declared successful, and the BOJ moved on to its scheduled CBDC pilot project, which should examine “end-to-end process flow” and further connections with external systems.
Despite its global reputation as a “cash-based” society, Japan consistently takes a positive stance toward CBDCs, while, for example, in the United States, lawmakers and presidential candidates are leading a crusade against CBDCs. However, the pro-CBDC position of the BoJ doesn’t result in an anti-crypto policy. From April 2024, local businesses may be spared of taxes on “unrealized gains” from cryptocurrency holdings.
Asia remains more open to CBDCs, with China already gradually implementing its digital yuan, while Hong Kong, Singapore, Malaysia, India and South Korea are all researching CBDCs.
In early January, the National Bank of Cambodia announced it would introduce a CBDC in the country by the end of 2024. “The exercise of introducing ‘Lanka Pay’ and ‘Central Bank Digital Currencies’ has already begun,” the bank stated.
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