On the 13th, the Ministry of Finance held the 8th expert meeting regarding central bank digital currency (CBDC), which is expected to be used for app and card payments.
The meeting was published on the same day, but it was explained that this does not constitute a pre-judgment of the introduction of CBDC. The aim is to clarify the basic thinking and options regarding the main issues in possible system design, in preparation for the introduction of the system.
The Bank of Japan has not yet decided whether to issue a CBDC, which will serve as a “digital yen.” On the other hand, research and experiments are progressing like other major countries. The panel of experts said, “We hope that the Ministry of Finance, in collaboration with the Bank of Japan and related ministries, will move forward with preparations so that if a CBDC is introduced after public discussion, it can be issued without delay.” Stated.
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What is CBDC?
Abbreviation for “Central Bank Digital Currency” and refers to digitized currency issued by the central bank of each country or region. The major difference from virtual currency is that CBDC is a digital legal currency.
▶️Virtual currency glossary
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Regarding CBDC, the following topics were mainly discussed at this expert meeting:
- Role of the Bank of Japan and intermediary institutions
- Coexistence and role sharing with cash, bank deposits, and other payment methods
- Ensuring security
- Handling of information regarding users and transactions
- Necessity of legal response
- How to share costs
- cross-border payment
In the section regarding the role of the Bank of Japan, it is stated that “it is appropriate to manage mechanisms (ledgers, etc.) to accurately record and confirm CBDC.” Regarding technology, the statement states that “continuing consideration is required, including the possibility of utilizing technologies such as token type and distributed ledger technology.” Blockchain is included in distributed ledger technology.
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In addition, regarding the coexistence and role of CBDC with cash, he argues that it is basic to think of CBDC as mutually complementary. Regarding “anonymity,” we will consider anti-money laundering (AML) and countering the financing of terrorism (CFT) as important, taking into account the possibility that CBDC will facilitate high-value, high-frequency transactions. I think it should.
Other points raised include:
- Consider setting holding limits in consideration of the impact on the financial system and economy
- We will have sufficient discussions with companies as it may affect private business.
- The information handled by the Bank of Japan will be kept to the minimum necessary.
- The government basically receives information as necessary.
- Collaborate with relevant ministries and agencies to consider a wide range of legal responses.
- Promote cooperation and harmony with other countries
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According to the Nikkei Shimbun, based on this discussion, the Ministry of Finance will establish a new liaison meeting consisting of directors-general of related ministries and agencies and directors of the Bank of Japan by January 2024 to organize the general outline of the system design. The plan is to move forward with this.