The central Bank of Japan (BoJ) has stated that regulated stablecoins and a forthcoming central bank digital currency (CBDC) can coexist – and has given the clearest signal so far that Japan will launch a digital yen.
The Japanese media outlet CoinPost reported that BoJ Governor Haruhiko Kuroda spoke about the matters at a fintech forum this week.
Kuroda hinted that certain stablecoins could co-exist with a digital JPY in the Japanese economy and spoke of such stablecoins’ potential to carry out “conventional payment functions.”
He also talked up their potential use in the settlement space.
Mitsubishi UFJ Financial Group’s trust and banking arm (the nation’s largest financial group) this week revealed it has begun working on a stablecoin interoperability platform for bank-issued fiat-pegged coins.
The government has given Japanese financial firms the green light to launch yen-pegged tokens – with several domestic banks keen to move into the space this year.
And Kuroda appeared to suggest that such coins could co-exist in the Japanese digital economy, alongside a CBDC.
Kuroda also spoke of “technological progress” that could soon see Japanese businesses “use stablecoins and [a] CBDC for cross-border transactions.”
He suggested that doing so would possibly help “streamline the conventional banking system” in certain regards.
Is Japan Set to Welcome a Digital Yen?
The BoJ has been working intensively on a prototype digital yen for over two years.
Experts believe that both the BoJ and its South Korean counterpart are hoping to catch up with China – with Beijing now very close to a nationwide rollout.
Until very recently, however, the BoJ’s has been relatively non-committal on the subject of a digital yen launch.
The BoJ has suggested that its pilots are purely experimental. And it has insisted that the final say on issuance will be made by the government and lawmakers.
But Kuroda, speaking at a fintech conference this week, that Japan would “have to realize” a CBDC “in the future.” He added:
“I think [a digital yen] will [be issued].”
The Governor also explained that the digital yen pilot would enter a new phase in early April.
The BoJ has claimed that in the next phase of testing, it wants to build an ecosystem that integrates “central systems, intermediary networks, intermediary systems, and endpoint devices.”
Several private sector firms will also take part in the tests.
