A consortium comprising major private companies in Japan have begun exploring digital currencies in a bid to launch a digitized currency based on eYen. The consortium announced that it will begin trials for its own digitized yen in 2022, giving the impression that the private sector wants to embrace blockchain-based payment systems.
The new digital currency, known as DCJPY, will be bolstered by bank deposits and rely on a platform to facilitate fund transfers and streamline settlements amongst the private companies. The consortium constitutes Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, etc., and are led by crypto exchange DeCurret.
Streamlining Large Fund Transfers Top Reasons for the New Yen-based Digital Currency
A CBDC is a digital currency that shares the same parity value with fiat currencies. Unlike cryptos that are decentralized, CBDCs are controlled by a centralized entity, usually the country’s reserve bank.
A CBDC facilitates cross-border payments and helps the unbanked individuals to make payments. Getting the unbanked onboard is one reason several countries began experimenting with their CBDCs.
According to the Chief Executive of DeCurret, the proposed Yen-based digital currency will help private companies streamline gargantuan fund transfers and settlements. The various companies involved have been meeting frequently since last year to fashion out a way for digital payments.
Japan Still Developing Its CBDC
Last month, it was reported that the Bank of Japan is working towards developing a CBDC within the public sector. The top financial institution stated that it is working at keeping the design minimalistic for easier integration, while focusing on facilitating payment channels between the eYen and the current electronic payment infrastructure.
The BOJ, however, called for some regulations to be put in place to ensure that the CBDC functions with existing payment channels. The BOJ announced plans to begin the CBDC pilot in March, with the goal of examining modalities for cross-border payments.
Even the Bank of International Settlements are clamoring for CBDCs to counter the adoption of cryptos. The BOJ’s CBDC pilot tests are set to be completed in March, 2022.
The growth of cryptocurrencies has forced many countries to explore CBDCs. It has been surveyed that over 80% of countries are researching the digital versions of their fiat currencies, although a couple of countries have already implemented theirs.
China was one of the first to embrace the idea of digital currencies and proceeded to set up a task force in 2014. The country has already rolled out its digitized Yuan, with the intent to replace cash transactions.
Japan is one of the countries that are exploring CBDCs in the Asia region. Other countries include; Hong Kong, South Korea, The Philippines, Singapore, Cambodia, Vietnam, and Thailand.