TL; DR Breakdown
- Ex-BOJ official warns against use of digital yen in banks
- Yamaoka highlights issues of the digital currency
- Digital yen could launch in 2026
Although the hype has died down a little bit, most banks worldwide are still intensifying efforts to develop their CBDC. This is because they view the digital currency as an element that would take their institutions to the next level. However, an ex-official of the Bank of Japan has frowned against using the digital yen in financial institutions across the country.
Yamaoka highlights issues of the digital currency
According to the update, the officer in question, Hiromi Yamaoka, mentioned that the country should not use the digital yen as a basis for the formulation of its monetary policy. Notably, Yamaoka was one of the top officials in charge of the financial settlement sector of the Bank of Japan. One of the reasons for his statement was the massive interest rates that using the digital yen would entail.
He also mentioned that once the digital yen gains ground, the common citizens would be at the receiving end of several unfavorable conditions of the country’s currency. Yamaoka also said that the digital currency could also upset the country’s financial stability and destroy the economy in the process. Yamaoka presently heads a massive group of investments, including some of the biggest banks across the country. The latest news from the group of companies is that their private digital asset is currently in the works.
Japan could launch digital yen in 2026
As far back as October 2020, the Bank of Japan announced plans to venture into the development of its CBDC. During the period, it announced that the development and design would go through three different phases. The first and second phases will see the bank test the concept that it will lay the digital currency on. The final phase would involve a pilot test of the digital yen. The first phase has already been kicked to life last year and will end by March 2022.
The second phase, which will tackle various technical issues, will come to life this year. Although Japan was one of the flag bearers of crypto regulations worldwide, its citizens still rely heavily on physical cash to carry out their daily activities. This has shifted the focus of the digital yen to facilitate transactions offline rather than online. The Governor of the Bank of Japan told reporters last week that the bank was not in haste to develop its CBDC. He highlighted that their aims are focused on 2026 for the launch.