Japan’s central bank will go in April start testing of his own central bank digital currency (CBDC): A digital yen. For the time being, the test phase will only focus on transactions involving financial institutions. The Bank of Japan has indicated that it will take Sweden as an example in the development of its CBDC.
A digital yen
A CBDC is a digital version of a fiat currency issued by a central bank. This digital currency uses blockchain technology, and therefore has significant advantages over existing financial systems. Almost all central banks are developing a CBDC. Now also Japan.
According to the director of the Bank of Japan, Shinichi Uchida, it is important to test in the private sector first.
“If a CBDC is issued in the future, it is important to develop it in a step-by-step manner. Transparent communication with the private sector is also a crucial step towards full adoption in society.”
Thus Uchida. The Japanese central bank has indicated that it will take the development of the Swedish e-krona as an example, and not follow in the footsteps of China and their digital yuan. Sweden has carefully experimented to see how its digital crown can function in the existing financial system.
CBDCs are not without risk
China, on the other hand, is pursuing an aggressive campaign to push its digital yuan (e-CNY) up the noses of the public. However, to date, the e-CNY has not been what the Chinese government had hoped. Chinese consumers still seem to prefer traditional money, and appear to be ill-informed about the use of the e-CNY.
Although a very large number of countries are working on a CBDC, and some have already launched it, not everyone is enthusiastic about this. Critics say there are dangerous implications associated with CBDCs. In this way they would limit people’s financial freedom.
