The Bank of Japan has initiated formal discussions with the government about the potential launch of a central bank digital currency (CBDC), known as the digital yen. A local news channel reported that the bank and the government aim to resolve legal matters by the second quarter of 2024, although no official confirmation of the digital yen’s release has been made. The decision will be subject to a national debate, with a potential launch not expected before 2026.
In December 2023, the Bank of Japan received a report urging the creation of a digital yen, emphasizing that it should complement cash and limit personal data storage. Following a successful second phase of CBDC testing involving numerous transactions and users, the central bank is moving towards a CBDC pilot project to test comprehensive process flows and system integrations.
Japan’s positive outlook on CBDCs contrasts with the skepticism seen in the United States, where opposition is notable among legislators and presidential candidates. The Bank of Japan’s stance reflects a broader acceptance of the crypto market, with potential tax exemptions for local businesses on unrealized crypto gains starting April 2024.
Asia remains a region embracing CBDC projects, with China advancing its digital yuan and other countries like Hong Kong, Singapore, Malaysia, India, and South Korea exploring their own CBDC initiatives. The National Bank of Cambodia has also announced plans to introduce a CBDC by the end of 2024, signaling a growing trend in the region’s financial innovation.