The Bank of Japan (BoJ) has initiated its first official meeting with the Japanese government to discuss the potential development of a central bank digital currency (CBDC). Reports on January 26 indicated that both the Japanese government and the Bank of Japan have agreed to address legal concerns related to the issuance of a digital yen by the spring of 2024, as per information from local TV channel NHK. It's worth noting that neither the Bank of Japan nor the government has officially confirmed the launch of a digital yen, and any decision would undergo a "national discussion" before the year 2026.
In December 2023, the Bank of Japan received a report from an expert panel at the Ministry of Finance, recommending the immediate issuance of a digital yen. The report emphasized the coexistence of CBDC with cash and underscored the importance of minimizing the storage of personal data by the Bank of Japan. The central bank concluded the second phase of its CBDC testing in May 2023, having run the experiment for a year with 100,000 users and five intermediaries, handling between 500 and 3,000 transactions per second. Deemed successful, the Bank of Japan proceeded with its planned CBDC pilot project, focusing on examining "end-to-end processes" and exploring additional connections to external systems.
Despite Japan's reputation as a "cash-based" society, it has maintained a positive stance toward CBDC, in contrast to some opposition to CBDC in the United States. While Japan's central bank leans towards a pro-CBDC position, it has not translated into anti-cryptocurrency policies. Starting in April 2024, local businesses in Japan may be eligible for tax exemptions on "unrealized gains" resulting from holding cryptocurrencies.
In the broader Asian context, the sentiment towards CBDC remains open, with China gradually implementing a digital yuan. Other countries in the region, including Hong Kong, Singapore, Malaysia, India, and South Korea, are also actively studying the potential implementation of CBDCs. Earlier in January, the National Bank of Cambodia announced plans to introduce a CBDC in the country by the end of 2024, stating that work had commenced on the introduction of 'Lanka Pay' and 'Central Bank Digital Currency.'
