The Finance Ministry of Japan is considering the possibility of introducing a digital yen and plans to set up an expert panel in April to study its feasibility, as reported by NHK, a Japanese news outlet.
The panel will primarily focus on developing a framework for a central bank digital currency, also known as CBDC, and will refer to a study by the Bank of Japan (BOJ) in the last two years. The Ministry aims to utilise the insights from the expert panel to prepare for the potential launch of a digital yen.
CBDCs refer to digital versions of conventional currencies, such as the yen, euro, and U.S. dollar, that are backed and issued by central banks.
Unlike crypto, which claim to be decentralised and not supported by any central authority or government, CBDCs are issued by central banks and function within a centralised system.
Although CBDCs are still in their initial phases of development, critics of digital currencies issued by central banks have raised concerns that such technology would offer monetary authorities unparalleled control over financial transactions.
Furthermore, some individuals argue that CBDCs are not essential, and traditional payment methods are adequate.
Although there are concerns, several central banks worldwide are investigating the potential of issuing CBDCs, and the discussion about their application is still ongoing. The United States, China, India, and various European countries are already considering the feasibility of government-backed digital currencies.
The United Arab Emirates’ central bank is moving ahead towards the complete rollout of its CBDC, known as the digital dirham, for local and cross-border payments.
On March 23, the CBUAE revealed that it had entered into a deal with G42 Cloud and R3 to offer infrastructure and technology for the implementation of the CBDC. Besides addressing payment difficulties, the digital dirham is anticipated to promote financial inclusivity as the UAE strives to transform into a cashless society.