While all crypto headlines are currently focusing on the Bitcoin rally, many people are also keeping tabs of what is happening in regard to central bank digital currencies (CBDCs). As Japan inches closer to the launch of the digital yen, the arrival of the asset was heralded by the head of Japanese financial services firm Monex Group, named Oki Matsumoto. Earlier this week, Matsumoto spoke to Reuters and praised global central banks and the proactive approach they had taken for the development of CBDCs. He explained that from the standpoint of digital payments, the assets could be useful for potentially improving economies.
Matsumoto went on to say that the digital assets could even help in improving interoperability with traditional cryptocurrencies and stated that the legacy crypto space could become ‘more lively’. According to the CEO, since a lot of crypto exchange brokers don’t have access to bank accounts, they limit the ability of the traders in converting their crypto assets into fiat currencies. A CBDC in Japan will make conversion between traditional fiat and crypto assets smoother, especially through a ‘digital-friendly’ platform. This comment comes in the midst of the continued progress made on the matter of the digital yen by the Bank of Japan.
Earlier in 2020, the Bank had made its intention about issuing a CBDC known, and throughout the year, it has been making progress to move towards its issuance. Last week, it was reported that a total of 30 companies had been shortlisted by the Bank of Japan to enter into a partnership for the project. This group includes some of the top private institutions, utility providers, brokerage firms, and banks in the country. The currency will be issued by the banks for experimental purposes, which include the Sumitomo Mitsui Financial Group, the Mizhuo Financial Group, and the Misubishi UFJ Financial Group.
A former executive for the Bank of Japan, Hiromi Yamaoka explained that they were working towards establishing a consolidated landscape for digital payments. He said that there were a number of digital platforms in the country, but none of them were big enough to combat with cash payments. Therefore, they want to develop a framework that would make the different platforms compatible. Yamaoka also said that private banks had been included because this would improve the competitiveness of the digital yen. As smartphone-based payments services are growing in the country, such as PayPay, it would be necessary for the digital yen to showcase its affordability, security and speed.
It appears that Japan is racing against China in regard to the development of a CBDC, as the latter has made significant progress towards a digital yuan. Other countries have also entered the CBDC development race, like the two largest economies in Asia, but China is still leading. The latest region to join the digital yuan trials was a city west of Shanghai, Suzhou. The region’s district of Xiangcheng will be launching the asset’s ‘red trial’. The program will be initiated on December 12th.