Japanese policymakers must engage more with platform operators and financial institutions to ensure any plan to issue a digital yen does not crowd out the private sector, a lawmaker overseeing the ruling party’s deliberations on digital currencies said.
The Bank of Japan plans to begin experimenting next year with issuing its own digital currency, as other central banks step up the pace of their digital currency development.
With an eye on rapid progress China is making towards a digital yuan, Japan’s ruling Liberal Democratic Party (LDP) has urged the BOJ to speed up development of a digital yen.
“Japan should seek to maximise the potential a central bank digital currency (CBDC) can offer,” Hideki Murai, who oversees the party’s project team on digital currencies, told Reuters in an interview on Tuesday.
But CBDC is not the only way to make digital settlements more convenient, he said, stressing that Japan should be open to other means such as enhancing its existing settlements system.
“The key is to ensure CBDC doesn’t crowd out private businesses,” Murai said, adding the project team’s focus next year would be to get private companies more involved.