The cryptocurrency market has been viewed cautiously pending the launch of a central bank digital currency [CBDC], without knowing what its impact on a country might be. In recent months, many countries have taken a step towards understanding, regulating and launching their own CBDCs, Japan being one of them. However, can it be said that Japan is motivated by the need to tackle the Chinese digital yuan, more than anything else?
According to a report from the Bank of Japan [BoJ], it will launch experiments with its digital currency to understand the problems and technical issues associated with it. In fact, the nature of this system is noteworthy, as the BoJ has been studying the advantages and disadvantages of centralized systems and block-chain systems.
If the BoJ does not want to fall behind China, it is clear that the country is already ahead of Japan. China has already tested its digital currency in several parts of the country and is optimistic that it will be launched on a larger scale soon.
In light of China’s progress in developing the digital yuan and its ecosystem, Japanese legislators had previously urged the government to work with the United States of America to address the potential impact of the digital yuan.
In fact, a former Minister of the Economy noted the instability that could arise if dollar regulations collapsed and China’s launch of the CBDC resulted in monetary supremacy. In order to maintain this monetary balance, the BoJ argued that the CBDCs’ marketing should have a cash equivalent function and note the role of “a method of payment that can be used safely and reliably by anyone, anytime and anywhere”
The central bank, which has focused on ensuring “universal access” to the digital yuan, also aims to digitize the currency. Although not everyone will have permanent access to smartphones and the Internet, the bank plans to “develop terminals that can be used by different users”
As the country tests these technical issues and prepares to implement a functional CBDC, Accenture and the Digital Dollar Foundation recently collaborated and published a white paper outlining proposals for the development of CBDCs in the United States.