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Bank of Japan must be adequately ready for digital currency, says Kuroda

Updated: Jul 25, 2024
Published: Mar 16, 2021
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The Bank of Japan governor said the apex bank has to be adequately ready for when it would need its own digital currency. Apex banks globally are looking at developing central bank digital currencies (CBDCs), and Japan wants to do the same.

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BOJ should get ready for CBDC

Bank of Japan Governor Haruhiko Kuroda stressed the need for them to be ready for the time they would need to develop and issue a CBDC. As such, Kuroda said the BOJ would start experimenting on a digital currency later this year. Thus, indicating that the BOJ is committed to developing the CBDC, similar to the other leading countries.

He told a seminar that although the BOJ doesn’t currently have any plans to issue a CBDC, they don’t have to wait around until the need to roll out its own digital currency arises. Kuroda said, “From the viewpoint of ensuring the stability and efficiency of the overall payment and settlement systems, it’s important to prepare thoroughly to respond to changes in circumstances in an appropriate manner.”

The BOJ governor’s statement is in line with the bank’s timeline. Last October, the Japanese central bank said it would start experimenting on how to operate a CBDC in 2021. Central banks are left behind in terms of financial innovation, and the BOJ wants to work with other central banks to change the status quo.

The BOJ will start with experimenting on the basic functions of the CBDC. The first phase will focus on the issuance and distribution of the CBDCs and could commence early in the fiscal year, which would start in April.

Central banks are developing CBDCs

Central banks globally are either developing CBDCs or actively researching ways to develop and issue them. China is already testing its CBDC to see how it would perform in the real world. With the BOJ set to start working on its CBDC, the number of countries experimenting with digital currencies continues to increase.

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