Tetsuya Inoue, a former official of the Bank of Japan, explains that the country must hasten towards Digital Yen. Inoue, currently a researcher at the Nomura research department, expresses that the country is not in any haste to digitize its currency, but Japan should be concerned about the adaption to central bank digital currency (CBDC).
Inoue confirmed in an interview that its currency is extremely reliable and to unbank its population is out of the question, yet Japan is not in any haste to digitize its currency. While on the other hand, earlier this year, Masayoshi Amamiya, the Deputy Governor at the Bank of Japan, also expressed that there is no requirement for advanced economics as CBDC or Digital Yen will have less merit.
The case for Digital Yen
During 2019, the Japanese government started to encourage digital trading within its territory, while they were offering rewards concessions. At the beginning of the year 2020, the country initiated a digital currency group to work on the possibilities of a CBDC. Furthermore, Inoue explained that the mounting of the worldwide importance of digital decentralized currencies cannot be ignored. Digitalized currency is a part of different financial services including network externalities, and infrastructure. He furthers that the country is likely to face troubles conducting its business with other countries, since many countries are in the battle for economic domination.
Per Inoue, although, Japan is able to keep the traditional Yen stable, in case other countries introduce a digital financial ecosystem Japan would be left with no option but to be dependant on these systems given the absence of a national CBDC. Answering the question about concerns over the usage of personal data he confirmed that there must be a trade-off. It implies that people should provide their information in exchange for better services and other facilities.
Reminded that Japan had set up the research purpose on CBDC on its top priority, Inoue furthers that there will be a dire need to encourage Digital Yen to ensure long term economic stability in the country.