Bank of Japan is planning to apply financial technology to its operations in the future. Bank’s Governor Haruhiko Kuroda underlined the growing influence of fintech on global payments, settlements and financial services at the bank’s first ever FinTech Forum.
“FinTech has various implications for central banking. FinTech has a wide influence on payments, settlements and financial services, and could stimulate various economic activities, including e-commerce and “sharing economy” businesses,” Kuroda said in prepared remarks.
Bank of Japan intends to support the development of fintech in Japan to promote the welfare of financial service users as well as economic activities. The country is going to ease investment restrictions, which is expected to result in the increased flow of capital in an economy sitting on an estimated $9 trillion in individuals’ cash deposits.
Haruhiko Kuroda states: “Innovation in information technology has the potential to generate innovation, especially in financial services, and such financial innovation linked to information technology is expressed in the word FinTech. It is not at all surprising that information technology has a major influence on financial services, considering the close and inherent relationship between the two as described above.”
Fully understanding the importance of fintech and its possible impact on financial services Bank of Japan created FinTech Center in April. Besides, the Bank developed a FinTech Network consisting of a wide range of employees from the relevant departments of the Bank. The role of the Network is to promote the distribution of information and expertise related to FinTech in a cross-sectoral manner within the Bank.
Two Japanese financial services providers, SBI Holdings and SBI Ripple Asia Co. Ltd., have recently teamed up to establish a consortium that will develop new centralized domestic and foreign exchange services based on the blockchain technology.
The group is named Consortium for Considering Using Blockchain Technology to Centrally Provide Domestic and Foreign Exchange Services. It will initially include such members as SBI Sumishin Net Bank, Ltd. and the Bank of Yokohama, Ltd. New members will join the consortium in the near future, with 30 new banks are planned to be added by March 2017.
“Blockchain technology, representing innovative and key technology in FinTech, offers the potential for the user to build a system of higher flexibility and efficiency while improving the stability of financial institution systems,” the release said.
The companies will focus on the blockchain as they expect that the use of the distributed ledger technology will help to improve the existing payment and settlement services in Japan. The consortium plans to start using the blockchain technology in October 2016, while the testing stage will last till March 2017.