The ministry’s panel will reportedly focus on developing a framework for a central bank digital currency based on a technical study carried out by the Bank of Japan over the past two years.
Japan’s Finance Ministry is planning to establish an expert panel in April to explore the feasibility of introducing a digital yen, Japanese news outlet NHK reported.
According to the report, the ministry’s panel will focus on the creation of a framework for a central bank digital currency (CBDC) and will refer to a technical study conducted by the Bank of Japan (BOJ) over the past two years. The ministry intends to use the findings from the expert panel to prepare for the possible issuance of a digital yen.
CBDCs are digital versions of traditional currencies, such as the U.S. dollar, yen and euro, issued and backed by central banks. Unlike cryptocurrencies, which purport to be decentralized and not backed by any government or central authority, CBDCs are issued by a central bank and operate within a centralized system.
Although CBDCs are still in the early stages of development, opponents of central bank issued digital currencies have expressed concern that this technology would give monetary authorities unprecedented control over financial transactions. Additionally, some people argue that CBDCs are unnecessary and that traditional forms of payment are sufficient.
Central bank digital currency (CBDC): Government control your money.
Bitcoin: You control your money. pic.twitter.com/KnUBuR7CE8
— Pan ₿ (@satstackerMY) December 30, 2022
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Despite these concerns, many central banks worldwide are exploring the possibilities of issuing CBDCs, and the debate surrounding their use is ongoing. The United States, China, India and several European nations are already examining the viability of state-run digital currencies.
As previously reported by Cointelegraph, the Central Bank of the United Arab Emirates (CBUAE) is making progress toward the full launch of its CBDC, called the digital dirham, for domestic and cross-border payments. On March 23, the CBUAE announced it had signed an agreement with G42 Cloud and R3 to provide infrastructure and technology for the CBDC implementation. In addition to addressing payment challenges, the digital dirham is expected to promote financial inclusion as the country aims to become a cashless society.