TL;DR Breakdown
- The BOJ governor says the central bank has to thoroughly prepare for a CBDC for when the need to issue one arises.
- The bank will begin experimenting with its digital currency later this year.
Since the COVID-19 outbreak, the world has been gradually considering digital alternatives, like cryptocurrencies, for settlements and payments. To keep up with the shift, many central banks began studying the feasibility of issuing a central bank digital currency (CBDC). However, not every central bank sees a tangible reason for issuing such a digital currency yet.
Japan is among the popular countries whose central banks currently don’t have any intention to launch a national digital currency. However, the Bank of Japan (BOJ) has been studying about CBDCs to keep up with other central banks, just in case the need for it arises.
BOJ governor calls for thorough preparation for CBDC
The BOJ governor, Haruhiko Kuroda, mentioned in a seminar on Tuesday that they will start experimenting on a national digital currency in spring 2021, according to a report by Reuters. He stressed today that the central bank ought to thoroughly prepare for its central bank digital currency for when the need arises. By doing so, BOJ runs along with other central banks in the development of CBDCs.
Central banks don’t have to idly wait for the need to launch a digital currency before planning for it. “From the viewpoint of ensuring the stability and efficiency of the overall payment and settlement systems, it’s important to prepare thoroughly to respond to changes in circumstances in an appropriate manner,” the BOJ governor said.
Since the past year, the BOJ has been studying CBDCs, although it doesn’t see any strong case for issuing a digital currency. In October, the bank announced its plans to experiment with how to operate its digital currency and other important functions of CBDC by 2021.
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