In the absence of any expression of interest from the Japanese, the Bank of Japan (BoJ) is ending its CBDC project. And yet, it has already conducted viability tests of a yen-backed central bank digital currency since April 2021.
The Japanese don’t need it
The Japanese do not seem to buy into the CBCD project that the BoJ launched in 2021. For them, fiat and other types of current digital payments are more than enough. Besides, don’t they now have access to cryptocurrencies without being able to go through trusted third parties? Because if the Japanese prefer to stay on the products and services of local commercial banks, it is because they are gradually moving towards diversification.
Lately, we have known about the existence of banks like Sumitomo Mitsui Trust or Nomura who have just integrated bitcoin into their ecosystem. Even local businesses are starting to take an interest in adding cryptocurrencies to their payment methods. To name only the used car seller SBI Motor Japan.
As for their love for fiat, it should be noted that the oldest Japanese seem far from abandoning their practices. And there is reason to stay the course, since the interest rate for retail deposits is really very low, 0.001%.
Consequence: the Japanese Central Bank ordered the cessation of the CBDC program.
Japanese CBDC project gets hara-kiri
The history of this Japanese central bank digital currency program dates back to October 2020, during which time the BoJ revealed details about it. In April 2021, the institution conducted the first phase of its PoC test of this CBDC project. An opportunity to explore its basic functions, including issuance, distribution and redemption.
It ended on March 25.
The second phase of Japan’s CBDC program was to implement additional features. And also to do the feasibility study of the CBDC and to discover the difficulties during the process. Parameters such as cybersecurity and counterfeits have been studied on occasion. For this, the Bank of Japan had to call on the fintech Soramitsu and other central banks such as those of Fiji, the Philippines and Vietnam.
Now that stage number 2 has come to an end, the BoJ has deemed it necessary to put an end to this CBDC project. So there will be no third phase. And no more dreams of a state monopoly in the face of the rise of alternatives to traditional currencies, including bitcoin. A ” dead in utero “, we say in medical circles.
And yet, France seems very straddling its CBDC program. Currently, the Central Bank is testing its digital currency and plans to make it effective sometime in 2023. As for the digital euro, we have to wait until 2026 before seeing it emerge from its incubator. So, can we say that only China has taken the lead on this side?
Sources: Ledger Insights ; Central Banking ; Daily Corner ; Crypto Slate
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