Japan to set up panel to discuss digital yen

In this April 21, 2022 file photo, a security guard enters the Bank of Japan building in Tokyo. PHOTO AP TOKYO Japan is stepping up efforts to issue a digital yen with the creation of a government advisory panel and the launch of a pilot program, joining a growing number of countries exploring a central bank digital currency.

Two sources who have knowledge of the matter told Reuters that the finance ministry will set up a panel of experts as early as April to discuss the feasibility of issuing a digital yen.

The central bank decided to start a pilot program in April to test the use of a digital yen, moving Japan closer to issuing a CBDC in several years.

The Bank of Japan completed its initial phase of experiments in March 2023, and the government pledged to look at the feasibility of a CBDC under a medium-term policy platform issued in 2021.

One of the sources said that the plan to set up a government panel will be in line with the pledge made in the policy platform, a view echoed by the other source.

Both sources didn't want to be identified because they are not authorized to speak publicly.

Finance Minister Shunichi Suzuki told reporters on Friday that the government was still looking at ways to meet the pledge to examine the feasibility of a CBDC, including the idea of a panel.

The BOJ hasn't made a decision on whether or not Japan will issue a CBDC. It spent two years experimenting and will move onto the next phase of the pilot program from April in order to be ready in case the government decides to issue a digital yen.

The pilot program may last a long time, according to the central bank. If the government is going to issue a CBDC for public use, some laws may need to be revised.

In a speech on Tuesday, BOJ Governor Haruhiko Kuroda said that the coexistence of CBDC with various other forms of money is something we need to achieve in the future.

On Thursday, NHK reported that the finance ministry was considering setting up an advisory panel in April to discuss the possibility of a digital yen.

Central banks around the world have stepped up efforts to develop digital currencies to modernize financial systems and speed up domestic and international payments.

The US Federal ReserveFederal Reserve is exploring a fully digital dollar that some people have referred to as Fedcoin. The launch of such an asset would require the support of elected leaders, according to Fed leaders.