By Leika Kihara and Kentaro Sugiyama
TOKYO (Reuters) – Japan will have more clarity on what a digital yen would look like by the end of next year, said a lawmaker who oversees the ruling party’s digital currency plan, potentially sparking a turf war between traditional lenders and traders. of online platforms.
The Bank of Japan launched the first phase of its central bank digital currency (CBDC) experiment in April, joining forces with its counterparts to match the rapid pace of private innovation.
He hopes to move to the second phase next year to establish some key functions of a digital yen, such as which entities will serve as intermediaries between the BOJ and the depositors.
“By the end of next year, we will have a clearer vision of what Japan’s CBDC would look like,” Hideki Murai, who heads the ruling Liberal Democratic Party’s panel on digital currencies, told Reuters in an interview on Friday.
While no immediate decision will be made on issuing a CBDC, more details on its design may stimulate debate on how issuing a CBDC could affect financial institutions, he said.
That could test the BOJ’s argument that a digital yen will not crowd out or interfere with private businesses, Murai said.
Japan’s financial industry is already facing massive change as non-bank retailers start offering various means of online settlement, venturing into commercial bank territory.
If CBDC is designed in a way that turns commercial banks into key intermediaries, that could move business and data from those platform providers to banks, Murai said.
“If the BOJ were to issue CBDC, it would have a huge impact on Japan’s financial institutions and settlement system,” Murai said. “CBDC has the potential to completely reshape the changes taking place in Japan’s financial industry.”
Murai also said that the BOJ should ensure that a digital yen is made compliant with the CBDC of other developed nations, in part to counter China’s rapid progress towards issuing a digital yuan.
The BOJ is one of a group of seven large central banks that jointly examine the fundamental characteristics of CBDCs.
“If a digital yuan becomes so convenient that tourists use it frequently or it becomes a primary settlement medium for trade, the relationship between the yen and the yuan could change” and erode the yen’s status as a safe haven currency. sure, Murai said.
Fusion Media or anyone involved with Fusion Media will not accept any responsibility for loss or damage as a result of reliance on information, including data, quotes, charts, and buy / sell signals contained on this website. Be fully informed about the risks and costs associated with trading the financial markets, it is one of the riskiest forms of investment possible.