Japan’s Ministry of Finance is scheduled to hold a meeting of experts on April 21 to consider the country’s future with a central bank digital currency (CBDC), according to Reuters. Nine experts—including economists, academics, a consumer group representative, and a lawyer—will meet regularly and compile a report on their feedback and recommendations by the end of the year.
Two Years in the Making
Bank of Japan (BOJ) has been piloting programs for two years, trying to arrive at a decision of whether it should issue its own CBDC. Back in February, it was announced that the country would launch a pilot program this spring to test the use of a digital yen.
When the program launches, pilot program, Bank of Japan will carry out simulated transactions with private financial institutions, but within a test environment. Real transactions between retailers and consumers will not be performed.
This test program aims to prepare Bank of Japan, should the Japanese government decide to issue a digital yen.
Kazuo Uchida, who has been named as the next BOJ deputy governor by the government, said in a press release:
“If a CBDC were to be issued in the future, exploring its framework in such a phased manner and engaging in highly transparent communication with the private sector are necessary steps to take for adoption in society.”
As Japan continues to be on the fence on their decision to issue their own CBDC, the pilot program could last several years.
A finance ministry official shared with reporters:
“We understand the BOJ’s study is making a steady headway. However, we have not at all decided on whether Japan will issue a CBDC.”
For now, the Financial Services Industry and the BOJ will attend the meeting as observers during the panel.
Looking Ahead
As many countries continue exploring the road to issuing their own CBDCs, something that has not been considered is some of the risks associated with it. What central banks must consider is that a CBDC that is poorly designed could potentially impact financial stability, monetary policy implementation, and payment systems. Therefore, some governments that have been hesitant to issue their own CBDCs have well-founded reasons.