By Alicia Maher
Hideki Murai (who heads the cryptocurrency committee of the ruling Liberal Democratic Party) has announced that new updates regarding Japan’s Central Bank Digital Currency (CBDC) can only be by next year and not this year again.
Important Features of the Digital Yen Needs Clarity
The top party representative revealed that there are important features of the digital Yen that the Bank of Japan (BoJ) is yet to sort out. An example of such a feature is the definition of entities that would bridge deposit holders and the central bank. In a recent interactive session with Reuters, Murai said, “the design of our CBDC would have taken shape latest by the end of next year.”
He further said that the apex bank is yet to decide whether to issue a digital Yen when the second phase of CBDC testing starts. This second phase is scheduled to begin next year. But Murai remarked that there might be an ensuing argument on the effect of the digital Yen on banks and other financial institutions as more details about it are revealed in due course.
Even before releasing its CBDC, Japan’s financial market is currently undergoing a major evolution as there is a rise in the number of non-finance firms providing online settlement services. The only way this evolution won’t sweep the banks away is for the BoJ to make it mandatory for commercial banks to be relevant in the design and release of the digital Yen.
The official further remarked that “a BoJ-issued CBDC would affect our country’s financial and settlement systems greatly. There is a possibility that the CBDC will reverse the current shift in our country’s financial landscape.”
Digital Yen Vs. Digital Yuan
Murai also said that BoJ’s digital Yen must be consistent with other government’s CBDCs to ensure that it is better than China’s digital Yuan. “There would be a significant gap between the Yen and Yuan when the digital Yuan is more frequently used in trade settlements or by tourists.”
He warns that the Yen’s position as a currency haven will be eroded completely if this should happen. The initial announcement of a CBDC development was made last year October by the BoJ. But the BoJ stressed that it had no plans of issuing the CBDC yet.
Three months ago, the bank trialed the first phase of the CBDC. The target of this first pilot was to develop a test environment, including the proper functioning of basic CBDC features such as redemption, distribution, issuance, and payment.
State Bank of Vietnam to Pilot Crypto Use
Pham Minh Chinh (prime minister of Vietnam) has mandated the country’s central bank (the state bank of Vietnam) to test cryptocurrency use across the country within the next two years. The prime minister also wants the apex bank to involve itself in the mastery and application of blockchain technologies to move the country’s economy forward.
The prime minister’s decision would be good news to Vietnamese crypto traders as there is yet to be any crypto-related regulation.