Digital Yen: Bank of Japan Plans Retail Payments – News Directory 3

Japan is actively piloting a digital yen, aiming to modernize its payment⁢ infrastructure and enhance its position in the evolving global financial landscape. This initiative reflects a broader trend among central banks exploring ⁣Central Bank Digital Currencies (CBDCs).

The digital yen is a proposed digital form of⁣ the Japanese yen, issued ⁤and regulated by the Bank ⁢of Japan ⁤(BoJ).⁤ Unlike cryptocurrencies like Bitcoin, which are decentralized, the digital yen would be a central bank digital currency (CBDC), meaning it’s⁤ controlled by the nation’s monetary authority. The ⁢BoJ initiated research into CBDCs as early as 2014 (Bank of Japan), and formally launched the pilot program in April 2024.

Several factors are⁣ driving Japan’s interest in a digital yen.Firstly,cash usage remains relatively high in Japan compared to other developed economies.⁤ According to a 2022 report by the BoJ, cash accounted for approximately 80% of transactions at points of sale (bank of Japan, 2022). A digital yen could encourage⁣ greater efficiency and reduce the costs associated with handling⁢ physical currency. Secondly, Japan aims to maintain ⁢its technological leadership and compete with⁣ other nations developing CBDCs, such as China’s digital ⁢yuan (Atlantic Council). ⁢a digital yen could facilitate faster and cheaper cross-border payments.