Bank of Japan Forms New Team to Explore Central Bank Digital Currency

The Bank of Japan (BOJ) has set up a dedicated team to explore the implications of central bank digital currencies.

• As reported by Reuters on Monday, the central bank is warming up to the possibility of a digital yen, given the recent rise in interest among other central banks.
• While details are limited, the new team will likely follow up on the BOJ’s 2019 research into central bank digital currencies (CBDCs), as well as the additional research it has been conducting with other central banks since January.
• The team will form part of the central bank’s payment and settlement department.
• Deputy Governor Masayoshi Amamiya previously said that it would be hard for central banks to make negative interest rate policies more effective through the issuance of their own digital currencies.
• He reasoned that it would force individuals and businesses to pay to hold a CBDC and, as such, would motivate people not to use the digital form of money.
• But the BOJ is shifting its thinking on the technology as regional rival China's digital currency enters testing with commercial entities.
• Japan's government is set to examine the possible launch of a digital yen as part of this year's policy agenda, per a report last week.

Also read: Bank of England Considering a Central Bank Digital Currency, Governor Says