The Bank of Japan (BoJ) is not ready to issue a CBDC due to a lack of interest from the public. Due to the prevalent digital payment and banking services available in the country, the public finds benefits in using private-sector financial services more attractive.
The Bank of Japan brushed upon the thoughts of having a Yen backed CBDC in 2021, and began phase 1 of its testing in April.
According to the bank, most of citizens are resistant to comply with CBDCs since they are provided with many low-cost, efficient internet banking services and digital payment tools.
Moreover, the other payment platforms provide users with additional benefits such as
payment points which can be later used for shopping.
Crypto still remains incompetent to it at the moment in Japan.
Despite the emergence of digital payment methods, cash usage continues to dominate, particularly among Japan’s older demographic — as a 3rd of the country’s population is aged 65 or above.
Cash issuance remains high in Japan, accounting for a total 20% of the country’s nominal gross home product.
The long-standing decline in the retail deposit interest rate, has resulted in a slight rise of Japan’s cash circulation; it has remained at a mere 0.001 per cent since 2017 for ordinary retail bank accounts.
This has led to cash hoarding as opposed to bank deposits across the country. Clearly this disincentivizes crypto exchanges and technology firms from entering the market.