To scale up measures to issue a Central Bank Digital Currency (CBDC), Japan has formed a new committee. The committee called “Liaison and Coordination Committee will be coordinating CBDC efforts.
Japan’s CBDC Committee
According to a Bank of Japan (BOJ) statement, the committee would include the Japanese and international banking community, securities dealers, payments associations, and the fintech community.
Although the BOJ has no plans to issue CBDC presently, it disclosed that it would engage in experiments on general-purpose CBDC in April. The bank claims it will initially test the technical feasibility of the core functions and features required for CBDC through Proof of Concepts.
The newly launched committee would then focus on facilitating the smooth implementation of the proof of concepts for the CBDC. The BOJ also said that it would update the private sector and policymakers through the committee and seek input on the next steps.
For now, the committee’s meetings would be held online due to COVID-19 restrictions. Its secretariat has been established in the Payments and Settlement Systems Department of the BOJ.
Earlier this month, the bank’s Governor, Haruhiko Kuroda, stressed the regulator’s need to be cautious in developing CBDC. The BOJ has to prepare thoroughly to respond to changes in circumstances appropriately, Kuroda said.
Kuroda believed that a digital yen could disrupt the overall payments and settlement systems’ stability and efficiency if not properly developed and implemented.
China Racing Ahead Of Japan
One of the leading central banks for a CBDC is the People’s Bank of China, China’s central bank. People like Hiromi Yamaoka, a former BOJ official, had expressed surprise with China’s speed saying central banks tend to take a cautious stance on such matters.
Japan had followed the race of issuing a CBDC after China showed interest in introducing its digital yuan. However, Japan has slowed down and began to take caution while China continues to race.
The People’s Bank of China reportedly gave away about 20 million worth of its digital currency earlier this year. Reports also speculate the bank targets a 2022 launch for the digital yuan in time for the Beijing Winter Olympics.
Another country exercising caution with issuing a CBDC is the United States. The U.S. Federal Reserve had revealed that it was researching and investigating CBDC.
The Federal Reserve Chairman Jerome Powell had earlier said the U.S was prioritizing quality over speed and so is not perturbed about other countries having a first-mover advantage when it comes to issuing CBDCs.
According to Powell, the central bank will not decide on issuing the digital dollar until it resolves CBDC-associated risks involving cyber attacks, financial stability, privacy, and security.