- Japan nears launch of digital yen, laying legislative groundwork for rollout
- Bank of Japan and government discussing system design and legal issues for CBDC
- Legislation being developed to assume introduction of digital yen
- Ministry of Finance discussing roles of Bank of Japan and intermediary banks
- BoJ wants domestic commercial banks to play key role in digital yen issuance
- Government and BoJ considering ways to allow private businesses to participate in the project
- Discussions on interoperability, security, handling of user information, and cross-border payment options
- MasterCard claims CBDCs not yet ready for mainstream use
Japan is preparing to launch its central bank digital currency (CBDC), the digital yen, with the government and the central bank making legislative advancements to facilitate the rollout.
II. Development of Digital Yen
The Bank of Japan (BoJ) has accelerated the development of its digital yen in response to China’s progress with its own CBDC. The government and the BoJ recently held their first meeting on the CBDC’s “system design,” addressing future points of contention and legal issues. Tokyo aims to establish a legal framework for the digital yen launch well in advance to avoid obstacles in the future. The proposed legislative changes will assume the introduction of the digital yen.
III. Legislative Work
The government and the BoJ are looking to make amendments to the Bank of Japan Act, the Criminal Code, and the Civil Code to support the introduction of the digital yen. They plan to finalize the list of necessary legal amendments by spring of the current year.
IV. Role of Commercial Banks
The Ministry of Finance discussed the division of roles between the Bank of Japan and intermediary banks in relation to the digital yen issuance. The BoJ is proposing a two-tier structure where domestic commercial banks play a key role in the issuance, acting as intermediary institutions between the central bank and digital yen users.
V. Security and Interoperability
Government officials and BoJ representatives explored options for private businesses to participate in the digital yen project while ensuring fair competition. They also discussed interoperability options between the CBDC and other payment methods, as well as the security and handling of user information. In addition, cross-border payment options were considered.
While the official launch of the digital yen has not been confirmed, Japan is taking significant steps to lay the groundwork for its CBDC, with the aim of addressing legal, operational, and security aspects to ensure a smooth and efficient rollout.
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