Bank of Japan’s CBDC Discussions
In a landmark development, the Bank of Japan (BoJ) recently engaged in its first official meeting with the country’s government to deliberate on the issuance of a Central Bank Digital Currency (CBDC). An agreement was reached on Jan. 26 to focus on resolving legal challenges related to the digital yen, with the target set for the spring of 2024.
Delayed Launch Decision
Despite the commitment to resolving legal issues, neither the BoJ nor the government has officially confirmed the launch of the digital yen. Any decision regarding the CBDC’s launch is contingent on a “national discussion,” with a timeline no earlier than 2026, signaling cautious deliberation.
BoJ’s CBDC Testing Phases
Following recommendations from a Ministry of Finance expert panel in December 2023, urging prompt CBDC issuance, the BoJ concluded the second phase of CBDC testing in May 2023. The successful experiment, involving 100,000 users and various transaction loads, paved the way for the scheduled CBDC pilot project. This phase will scrutinize the “end-to-end process flow” and foster connections with external systems.
Japan’s Unique Stance on CBDCs and Cryptocurrency
Contrary to global trends, Japan maintains a positive approach toward CBDCs without adopting an anti-crypto policy. Starting April 2024, local businesses may enjoy tax relief on “unrealized gains” from cryptocurrency holdings, showcasing a balanced regulatory stance.
Asia’s CBDC Landscape
While Japan navigates its CBDC journey, Asia continues to be receptive to digital currencies. China is already implementing its digital yuan, and countries like Hong Kong, Singapore, Malaysia, India, and South Korea are actively researching CBDCs. This regional openness contrasts with the hesitancy in some Western countries.
Cambodia’s CBDC Plans
Beyond Japan, other Asian nations are making strides in CBDC adoption. The National Bank of Cambodia recently announced plans to introduce a CBDC, named “Lanka Pay,” by the end of 2024, emphasizing the region’s dynamic approach to financial technology.