April 4, 2023

Japan Forms Expert Panel for CBDC Framework

Japan Forms Expert Panel for CBDC Framework Featured Image

The Japanese Finance Ministry plans to set up an expert panel this month to explore the feasibility of introducing a digital yen, Cointelegraph reported.

The Japanese expert panel is set to tackle how to create the framework of the digital currency (CBDC) using the results of a technical study conducted by the Bank of Japan (BoJ) two years ago until March.

It is worth mentioning that the launch of the expert panel coincides with the digital yen pilot program in which the Japanese central bank, private companies, and financial institutions. At least three Japanese megabanks and regional banks will cooperate with the central bank.

Earlier, BoJ Executive Director Shinichi Uchida said the pilot phase would see no actual retail transactions but only simulated ones. However, officials of the Japanese bank said it has no concrete plans to issue the digital yen as the legal and technical framework issues are supposed to take time to be sorted out.

CBDC’s total value of payments is expected to grow 260,000% in the coming decade to record $213 billion annually by 2030, compared to $100 million in 2023, a new study revealed.

According to Juniper Research, the radical change will occur because of the increasing world governments’ adaption of the CBDCs to bolster financial inclusion and tighten control over how digital payments are made.

CBDC is a digital coin issued by a central bank and pegged to the country’s fiat currency. It is not a cryptocurrency, whose value is determined by market supply and demand.

The research found that domestic payments would account for more than 90% of the total value transacted via CBDCs. Because they are issued by central banks, CBDCs will be targeted by domestic payments. The report suggested that the cross-border payments will happen later following stronger links and ties among entities in terms of CBDCs in the individual country.

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