Japan’s new political leadership is calling on the country’s financial bureaucrats to step up efforts to issue digital currency, as China’s much faster development poses a potential challenge to the global economic order.
The government has increased the number of staff examining the legal and technical aspects of the issuance of the central bank’s digital currency (CBDC). That is, the new currency is seen as a digital form of the existing currency.
Although political attention is not yet turning into direct investment, analysts say the Bank of Japan (BOJ) is likely to pressure to change
“We need to rethink what can happen to Japan’s national security if other countries move forward with the CBDC. Japan needs to take action.” to speed things up so that it is ready to release the digital yen at any time, “said Takayuki Kobayashi, Minister for Economic Security, who has been given a new role under Prime Minister Fumio Kishida, according to the news agency.
China is already testing the possible introduction of the digital yuan in major cities next year. Japan and the other G7 developed countries are moving much more slowly. The BOJ only began the first phase of its experiment in April and says it has no plans to release the digital yen immediately. Pilot programs, if any, could start in 2023 at the earliest. . While G7 central banks generally agree on the need to confront China on privacy issues, this argument is particularly strong in the case of Japan, as lawmakers are concerned about the growing economic power of a confident neighbor.
Some influential pro-government lawmakers see China’s advance in CBDC as a potential threat to the dollar’s global reserve currency status and Washington’s financial ally as Japan’s biggest ally. A close adviser to Kishida told Reuters that Japan “must work closely with the United States to counteract any attempt to jeopardize the dollar’s reserve currency status,” adding that the BOJ is in talks with the Treasury to make rapid progress on digital yen issuance.
According to BOJO officials, China’s plan does not directly affect the timing of their CBDC experiments, as the main purpose of issuing the digital yen is to provide convenient and efficient means of payment and settlement for the population. According to those familiar with the situation, the speed with which its European and US partners announce their CBDC release plans is more important than the Chinese plan
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