A crypto exchange in Japan is chairing a study group among Japan’s biggest three banks to discuss the potential for a CBDC in the country
The three biggest banks in Japan, according to a recent press release, have come together to create a ‘study group with the goal of building a digital settlement infrastructure’. These include Mizuho Bank, MUFG Bank and the Sumitomo Mitsui Banking Corporation. The study group will be chaired by Japanese cryptocurrency exchange DeCurret.
The group aims to explore the viability of introducing a universal digital settlement system across Japan, while discussing the potential drawbacks as well. The scheme could see widespread integration across non-financial institutions, such as the East Japan Railway Company, who are also partaking. JR East are eager to explore the potential benefits such a system would have for their popular rail card.
This new study group has potentially raised a few eyebrows among those who have been following digital currencies in Japan. The country’s stance has flip flopped, with a similar convention of financial authorities seemingly arriving at the overwhelming conclusion that the benefits of such a system outweigh the potential drawbacks.
However, the deputy governor of the Bank of Japan has dismissed CBDCs as only of value to developing nations. It should be noted that Japan has suffered two of the most significant crypto exchange attacks in history, Coincheck and Mt. Gox. As such, these hacks have set an ominous precedent for new blockchain-related ventures; many traditional financial institutions have therefore erred on the side of safety and avoided them.
It is almost impossible to overlook the pressure that Japan must be experiencing from its geographic neighbours to catch up in terms of digital currencies. Japan is closely situated to two countries who are deeply invested in digital payments and creating CBDCs: South Korea and China.
South Korea has an astounding 95% of their payments conducted electronically. Japan, however, for a country in many ways so technologically advanced, is also tied to traditional financial instruments, such as the use of cash. Japan aims for 40% of payments to become cashless by 2025, which in comparison to South Korea’s figure today, shows just how much Japan values cash.
China, an ever-looming figure in Asia and the world stage, has been brazenly developing a digital Yuan for some years now. It has been touting the many benefits of reduced costs, faster payments and is ultimately looking to tackle the dollar’s hegemony in world economics. It seems that Japan has finally realised that CBDCs are the future, perhaps in no small part because they do not wish to fall drastically behind China in the field of financial technology.