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Japan will look closer into whether to issue central bank digital currency (CBDC), the government reportedly said in its annual policy roadmap. In its first-ever reference to digital currency in the annual plan, the government urged the Bank of Japan (BOJ) to liaise with other countries to jointly examine its feasibility. "The BOJ will coordinate with other countries to consider CBDCs by examining and verifying technological tests," according to the document, which serves as guidance for the government's long-term economic and fiscal policies. The BOJ has said it has no immediate plans to issue a digital currency, it is conducting research with other central banks on the issue.

There are misleading stories circulating that the Bank of Japan has shut down its central bank digital currency (CBDC) project. They seem to be triggered by an Asia Times story that rehashed the July 5, 2022 report from the BoJ's Liaison and Coordination Committee on Central Bank Digital Currency, which reiterated its October 2020 position that "while the Bank of Japan currently has no plans to issue CBDC, from the viewpoint of ensuring the stability and efficiency of the overall payment and settlement systems, the Bank considers it important to prepare thoroughly to respond to changes in circumstances in an appropriate manner." So the project lives on!

A group comprised of about 70 Liberal Democratic Party lawmakers are working on a proposal for Japan to issue its own digital currency. The digital currency could be a joint initiative between the government and private companies, Norihiro Nakayama, parliamentary vice minister for foreign affairs, told Reuters.

Soramitsu, the developer behind the Bank of Cambodia's Project Bakong interbank payment system, is involved in a new project to enable payments between Cambodia, other Southeast Asian countries and Japan. Bakong already has cross border payments using QR codes with Malaysia, Thailand and Vietnam, and the additional jurisdictions being worked on include India, China and Laos, with Bakong effectively at the center of a hub. The new Mutsumi project will use Bakong and Japanese yen stablecoins to support Japanese SMEs in selling goods and digital services to Southeast Asian customers.

The Bank of Japan (BoJ) published the results of Phase 2 of its central bank digital currency (CBDC) proof-of-concept (PoC) that was conducted between April 2022 and March 2023. Although it is only available in Japanese, Norbert Gehrke wrote a summary of the report in English. The objective of the PoC Phase 2 was to uncover potential technical issues early as they relate to the basic functions covered in Phase 1. Some desirable peripheral functions not covered in Phase 1 were also added. Then, the technical implementation and processing performance was validated.

"Coinbase Global Inc. is halting operations in Japan, less than a month after another major digital asset exchange Kraken announced its withdrawal from the country."

A Bank of Japan (BoJ) official said the central bank has not scrapped its preparations for a potential CBDC launch, dismissing misleading reports by a number of media outlets. Tomohiro Sugo, head of the payment and settlement system division, told Central Banking that "the Bank of Japan continues preparing for the possible issuance of CBDC in the future and it has not quit its preparations." [Read more at Central Banking] As I mentioned a few days ago the misleading reports started with an Asia Times op-ed that rehashed inaccurately a July 5, 2022 report from the BoJ's Liaison and Coordination Committee on Central Bank Digital Currency.  

The Bank of Japan (BoJ) published an English version of its Liaison and Coordination Committee on Central Bank Digital Currency interim report. While the BOJ "currently has no plan to issue CBDC, the BOJ considers it important to prepare thoroughly to respond to changes in circumstances in an appropriate manner".  The report noted the strong preference for cash and high ratio of bank account holding in Japan, as reasons for cautiousness. However, as privately-issued digital currencies proliferate, a CBDC might be called for to provide broadly secure and neutral payment instruments to avoid fragmentation and monopolization of payment services, and to enable private businesses to utilize these as a source for creating new services.

The Bank of Japan (BoJ) completed the first phase of its central bank digital currency (CBDC) proof of concept (PoC) workplan. The initial stage that started in April 2021 explored issuance, distribution and redemption. The next phase will implement additional functions and test their feasibility. Based on the PoC, if the Bank judges it necessary to step things up further, it will also consider a pilot program that involves payment service providers and end users.

"As regulators look to regulate exchanges in light of the FTX's collapse, they would do well to look to Japan, which has some of the most mature rules in the world."

The Bank of Japan and the Ministry of Finance reportedly held their first(!) meeting to discuss a potential digital yen on January 26, 2024. The meeting also involved representatives from the Cabinet Office and National Police Agency. Observers from the Fair Trade Commission and the Personal Information Protection Commission. The Ministry outlined the need to ensure a CBDC can coexist with existing private sector digital payment firms, enhance payment convenience and protect users' personal information. https://www3.nhk.or.jp/shutoken-news/20240126/1000101448.html

The Bank of Japan (BOJ) published a progress report on its central bank digital currency (CBDC) proof of concept (POC) work. It's available only in Japanese, so I'm leaning on Norbert Gehrke's excellent summary. The BOJ is building an account-type CBDC ledger that covers everything from user wallets/apps to the intermediary and central systems. In parallel, the BOJ has established a CBDC Forum with 64 private companies organized into five working group themes, with more planned. The BOJ aims to steadily advance CBDC discussions through POCs and the CBDC Forum, although no decision has been made yet on actual CBDC issuance. https://www.boj.or.jp/paym/digital/dig240422a.pdf

The Bank of Japan (BOJ) held its seventh "CBDC Forum" and published the secretariat's presentation, which Norbert Gehrke kindly summarized in English. The presentation outlines the BOJ's stance on CBDC, delves into the specifics of the proof-of-concept work currently underway, and elaborates on the structure and activities of the CBDC Forum, which involves private sector stakeholders. https://www.boj.or.jp/paym/digital/dig240529b.pdf

As Japan moves to shorten its settlement window for cash equities, dealers are hoping that distributed ledger technology can reduce the probability of failed trades between domestic and foreign investors.

The Financial Services Agency of Japan issued crypto-asset related regulations for public consultation. They would impose a 2x leverage limit, which is stricter than the 4x leverage limit imposed by the Japan Virtual Currency Exchange Association, the industry's self-regulatory organization. It also includes a requirement for crypto-exchange to store more than 95 percent of its clients' assets in cold wallet. The consultation period would end by mid-February to be implemented by June 2020.

The Bank of Japan (BoJ) will engage in experiments on general-purpose central bank digital currency (CBDC) from fiscal year 2021. The BoJ will first test the technical feasibility of the core functions and features required for CBDC through proof of concepts (PoC). It has has established a "Liaison and Coordination Committee on Central Bank Digital Currency" through which it will share details of and provide updates on the PoC with the private sector and the government and will seek consultation on future steps to facilitate smooth implementation of the PoC.

Although it still has no immediate plan to issue central bank digital currency (CBDC) the Bank of Japan continues to "carefully consider the way in which we should provide central bank money." And "from the viewpoint of ensuring the stability and efficiency of the overall payment and settlement systems... [it] consider[s] it important to prepare thoroughly to respond to changes in circumstances in an appropriate manner." https://www.boj.or.jp/en/announcements/press/koen_2021/ko210316a.htm/

This Bank of Japan report published in September delves into the main legal issues related to the issuance of CBDC in Japan. It concluded that under current legislation, banknotes are considered tangible whereas so the current law would need to be revised in order to grant legal tender status to CBDC.

"In Japan, the amount of cash outstanding is still increasing, and it does not seem that there is a demand for CBDC from the public at present. Nevertheless, the Bank of Japan has been conducting technical and legal research on this matter in order to stand ready when the need for CBDC may arise in the future."

The Bank of Japan has just established a research team on CBDC within the Payment and Settlement Systems Department and will conduct further study on various issues through information exchange and discussions with the experts and relevant institutions in Japan, and other central banks.