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Japanese Government to Create Panel to Explore Digital Yen

UTC by Ibukun Ogundare · 3 min read
Japanese Government to Create Panel to Explore Digital Yen
Photo: Depositphotos

While there is a plan to set up a panel in April, the Japanese government is also launching a pilot program for the digital yen in the same month.

As the race for digital currencies intensifies, the Japanese government is considering launching a panel to examine the practicality of the digital yen. The Finance Ministry is reportedly considering creating an expert panel in April to examine the feasibility of issuing the digital yen. Since the Bank of Japan began research on CBDC in 2020, there have been numerous experiments to test the issuance of digital currency. Upon the success of a trial experiment, the government expects to roll out the central bank digital currency immediately.

Japan Launches Digital Yen Panel

According to reports, the digital yen panel will focus on creating a framework for a digital currency. The framework will be based on the findings from the over two years of proof-of-concept experiments conducted by the BOJ. According to the central bank’s officials, there are no concrete plans. The target is to create a framework for issuing the anticipated digital currency.

While there is a plan to set up a panel in April, the Japanese government is also launching a pilot program for the digital yen in the same month. This happens after the first phase of the proof-of-concept to test the physical feasibility of the CBDC. The first stage started in April 2021 as the central bank built an experimental environment around a CBDC ledger. It also confirmed the basic functions related to the currency, such as issuance, payout, and transfer. The PoC Phase 2 confirmed additional and more complex core functions than the initial stage. This phase also investigated the digital yen’s technical feasibility and processing performance.

More on Japan’s Digital Yen

As the panel creation and digital yen pilot program coincide next month, BOJ plans to further its experiments. The executive director of the central bank, Shinichi Uchida, stated:

“The aim of the pilot program is twofold: first, to test the technical feasibility not fully covered by the Pos and second, to utilize the skills and insights of private businesses in terms of technology and operation for designing a CBDC ecosystem in the possible event of social implementation.”

Another expected event in April is the change in leadership at the Bank of Japan. The current governor of the bank, Haruhiko Kuroda, will be leaving the position after a second five-year term ends in April. Kazuo Ueda is expected to replace him as the governor of the nation’s central banks. The panel could be one of the measures the executive director promised before issuing the digital yen. He had said that “if a CBDC were to be issued in the future, exploring its framework in such a phased manner and engaging in highly transparent communication with the private sector are necessary steps to take for adoption in society.”

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