The latest central bank to outset a number of experiments with a Central Bank Digital Currency (CBDC) is none other that the Bank of Japan (BoJ). Should its efforts produce fruit, this will ensue major changes to the local economy, and to some extent globally.
Last Thursday, the bank revealed that its current endeavors circle around the technical possibilities of such a currency,
“[we] check the feasibility of CBDC from technical perspectives, collaborate with other central banks and relevant institutions, and consider introducing a CBDC.”
This is the first time that the Bank of Japan has released an official statement detailing its effort on introducing a digital yen.
The bank disclosed that the introduction of a crypto yen has two main obstacles to overcome, namely resilience and universal access. The bank makes it clear that resilience in this case means that offline users must also have a way to access the digital yen. As for universal access, BoJ holds that all users will need a smart phone; this is a complication for the Bank because a surprising study revealed that 65% of Japanese citizens use smartphones.
The Bank is also at a crossroads whether to use blockchian technologies; centralized and decentralized systems both offer pros and cons. The bank said in connection that
“Both centralized and decentralized types have pros and cons…in the case of massive transactions for retail use cases in advanced countries, it is better to adopt the centralized type…in the case where the amount of transaction is limited and resilience and future possibility are prioritized, there is room to consider the decentralized type”.
There has been a peak of interest concerning the introduction of digital fiats around developed nations. The most important of these is the People’s Bank of China, which has been pushing for a centralized digital yuan for quite a while now.