This article briefly:
•The Bank of Japan plans to review the launch of a central bank digital currency (CBDC) in 2024, with a launch as early as 2026.
•The Bank of Japan is testing CBDC payment processes and has achieved transaction speeds of 500-3,000 transactions per second for 100,000 users.
•Japanese banks are exploring stablecoin settlement systems, with Mitsubishi UFJ Trust Co. announcing the launch of a new blockchain system in 2023.
The Bank of Japan (BoJ) has announced that it will review plans to launch a central bank digital currency (CBDC) in spring 2024. This follows several pilots that are expected to usher in a future for cryptocurrencies and digital fiat currencies in Japan.
According to an announcement on January 22, 2024, the central bank could launch a CBDC as early as 2026. The digital yen has been in the works since its first pilot in May 2023.
Japan’s CBDC pilot has entered an advanced stage
The Bank of Japan is currently testing an end-to-end CBDC payment process involving connections to external systems. Overall, the second phase achieved transaction speeds of 500-3,000 transactions per second between 100,000 users through five intermediaries.
Central bank digital currency is a blockchain version of a government-issued currency. It allows central banks, retail banks, and retail customers to settle fiat currency transactions faster than traditional banking rails. Depending on the architecture of the CBDC (several have been proposed and/or implemented), transactions will be recorded and synchronized in real time.
Additionally, central banks in the United Arab Emirates, mainland China, Hong Kong, and Thailand have tested a CBDC highway called mBridge to connect regional bank flows. Strengthening ties with Russia have accelerated China’s ambition to settle trade on private blockchain infrastructure.
US CBDC News Reveals Different Path from Japan
The topic of CBDCs has increasingly become a politically partisan issue in the US news. This comes as the primary elections enter their climax. Moreover, free speech advocates believe that CBDCs lay the foundation for social scoring systems and government tyranny. In an anti-CBDC bill called the ABDC Anti-Surveillance Act, Republican Tom Emmer aims to prevent the Federal Reserve from unilaterally issuing CBDCs.
“The bill limits the Federal Reserve’s ability to (1) provide direct services to individuals and (2) use central bank digital currencies, which are digital currencies (such as Bitcoin or Ethereum) issued by a central bank that is backed by a government.”
However, the CBDC issue seems less political in Japan, which has one of the oldest regulatory frameworks for cryptocurrencies. The government introduced laws after the collapse of bitcoin exchange Mt. Gox in 2014. In addition, upcoming updates may include legislation to exempt certain businesses from paying taxes on crypto assets.
Japanese banks are also fully supportive, with several of them exploring stablecoin settlement systems. In 2023, Mitsubishi UFJ Trust announced the launch of a new blockchain system connecting multiple banks, the Japan Exchange Group, and NTT Data. #日本 #CBDC
