A consortium of 30 Japanese companies is planning to issue and test a private digital currency using a unified settlement platform starting in April 2021, drawing on expertise from banks, utilities, retailers, brokerage firms and telecoms.
The initiative was announced on Thursday (19 November) alongside the release of a report proposing a common digital currency with an interoperable structure, to allow its use by different cashless payment service providers while maintaining their existing services.
The project aims to address a lack of interoperability between cashless payment applications, which remains a hurdle both for consumers and retailers. Currently, customers cannot use a smartphone payment app if a retailer does not have the specific terminal needed to accept it.
Similarly, Japan’s three megabanks have each created their own digital payment systems, which are incompatible with each other.
“Japan has many digital platforms, none of which are big enough to beat cash payments,” said consortium representative and ex-BOJ (Bank of Japan) official Hiromi Yamaok.
“We don’t want to create another silo-type platform. What we want to do is to create a framework that can make various platforms mutually compatible.”
The consortium said it will establish itself as the ‘Digital Currency Forum’ next month. Some of its key members include MUFG Bank, Sumitomo Mitsui Banking Corporation, Mizuho Bank, East Japan Railway, Aeon, Kyocera and Kansai Electric Power.
While no government agency is directly involved in the private digital currency initiative, the BOJ, FSA (Financial Services Agency), the Economy, Trade and Industry Ministry, the Finance Ministry, and the Internal Affairs and Communications Ministry are observers of the project.
Last October, the BOJ also announced it would begin testing a general purpose CBDC as early as April 2021. While it has not yet fixed a timeline for issuing a sovereign digital currency, the BOJ is collaborating with other central banks and fintech firms around the world in its CBDC research.