Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge. When he's not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
The ex BOJ official, Hiromi Yamaoka, does not subscribe to the idea of using the digital yen to help or improve Japan’s financial system.
The former head of the Bank of Japan’s (BOJ) financial settlement department is reportedly advising against using the digital yen in monetary policies. Hiromi Yamaoka, who once led digital currency research, expressed some concern about negative interest rates. Additionally, the ex-BOJ official said that using the digital yen for mass payments will reduce the fiat currency value. This would erode the purchasing power of the general public, who still hold an overwhelming majority of their wealth in fiat currency. Furthermore, the fallout could adversely impact financial stability and result in debilitating outcomes for the economy.
Regardless of his stand against the digital currency, Yamaoka suggests that Japan’s payment systems could significantly benefit from adopting a digital currency. As he put it:
“It’s obvious that the current payment system can’t stay as it is now, it’s in everyone’s interest to make it better and cheaper.”
Yamaoka currently works in the private sector where he presides over a forum of 74 firms. This forum also includes some of the largest banks in Japan presently. In addition, it is reportedly looking to launch a private digital currency by April this year.
BOJ Governor Sheds Further Light on Planned Digital Yen Launch
Governor of the Bank of Japan, Haruhiko Kuroda, noted in a recent statement that the central bank was not yearning to launch immediately. According to Kuroda, the digital yen may not launch earlier than 2026, and even then, other decisory opinions will be considered.
In October 2020, the BOJ released a trial outline for its central bank digital currency (CBDC), broken down into three phases. According to the outline, the first two phases of the trial focus on testing the proofs-of-concept. Phase One kicked off in April last year and will expectedly conclude in March this year. After this, the BOJ will begin Phase Two of the trials later this year. This would enable grounded testing of the technical aspects surrounding the issuance of the digital yen. Lastly, Phase Three will see a pilot rollout of the initiative.
Cash Remains King in Japan
Cash still rules as the prominent way of facilitating transactions in the Japanese retail sector. This is despite Japan being one of the first countries to embrace crypto and lay down supporting regulations. The reason for cash preference in the East Asian nation is natural calamities that compromise power supply throughout Japan. Many retailers seem to prefer offline transactions, and the BOJ has already considered that. Back in July 2020, the governing bank published a research report which focused on developing and establishing an offline CBDC.
China’s Digital Yuan
China plans to reportedly roll out its own digital yuan to athletes and spectators ahead of the Beijing games. The country’s central bank wants to use that avenue to test out the digital currency’s appeal among foreigners.