Monday, November 28, 2022

Bank of Japan To Test Digital Yen With Extreme Caution

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Bank of Japan will test the digital yen but with extreme caution as it prefers Sweden’s approach over China’s fast expansion of digital assets so let’s read more today in our latest crypto news.

Over the past few years, the countries around the world showed interest in central bank digital currencies but now, the Bank of Japan announced a new approach to the Digital Yen and stated that this is a developmental trajectory that will follow the steps of Sweden. The final decision will be made by 2026 as the BOJ Said.

The Bank of Japan considers the framework of the CBDC tied to the overall settlement system and while the experimental phases are ongoing, the central bank thinks that it is one of the main issues to ensure compatibility with the financail infrastrcuture and other CBDCs. Kazushige Kamiyama the head of the BOJ said that Sweden’s staged expansion and experimentation are much more suitable than China’s approach. China started a large-scale pilot testing of its digital currency during the Bejing Winter Olympics and aimed to push the broader adoption of the digital yuan.

digital yen

Sweden’s Riksbank focused on some smaller-scale technical research aimed to examine if the CBDC can fit into a settlement system with other digital payment providers. Neither the Bank of Japan nor Riksbank made a final decision on whether to issue digital currencies. Kamiyama added that these emerging economies comapred to the developed nations are much more prone to launch electronic money because of the weakness in their payment network. Another phase of studies is ready to be launched this month.

In the recent speech dedicated to crypto, the US Treasury Secretary Janet Yellen noted that central bank digital currencies and other stablecoin can achieve bigger adoption as a means of payment than BTC and implied that the FED-issued digital currency can outcompete BTC as a means of exchange because of its price instability. In the meantime, the Depository Trust and Clearing Corporation announced the launch of Proejct Lithium which will examine how real-time transactions on cash-like tokens can pass via the clearing and settlement process. This only shows that the US is researching the pros and cons of CBDC and paves the foundation for relevant experiments and studies in the near future.

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