A consortium of 70 Japanese firms, including the country’s three largest banks, says it will aim to launch a yen-based digital currency in 2022 after beginning trials in coming months.
The digital currency, tentatively called “DCJPY”, will be backed by bank deposits and use a common platform to speed up large-scale fund transfers and settlement among companies, Kazuhiro Tokita, chief executive of cryptocurrency exchange DeCurret which is leading the consortium, said at a news conference.
The consortium, which includes Mitsubishi UFJ Financial Group, Mizuho Financial Group and Sumitomo Mitsui Financial Group, has been meeting regularly since last year to study ways to build a common settlement infrastructure for digital payments.
The three mega-banks have each introduced their own digital payment systems but are seen to be behind efforts by technology firms such as PayPay – backed by tech investor SoftBank – which is not part of the consortium.
The consortium includes other lenders such as Japan Post Bank, brokerages and insurers, and non-financial firms such as Nippon Telegraph and Telephone, Kansai Electric Power and East Japan Railway. Some will participate in experiments to gauge such a currency’s use in industries ranging from energy to retail.
“A digital currency system built on a bank deposit-backed common platform will fit the CBDC that could be planned and implemented” in Japan, Toshihide Endo, a former head of Japan’s Financial Services Agency who is currently a special advisor to DeCurret, said at the conference, referring to a central bank digital currency.
The initiative could affect the Bank of Japan’s ongoing experiment regarding CBDC. Policymakers have said they would work closely with the private sector if the BOJ were to issue a CBDC.
Japan is one of the most cash-loving countries in the world, with many transactions still completed using notes and coins. Still, authorities have been keen to promote cashless transactions to increase productivity.
Within the public sector, the Bank of Japan has prioritised the development of a central bank digital currency, or CBDC, with a focus on providing seamless payment channels between the so-called digital yuan and electronic payment services.
While the BOJ is spearheading this effort, the end goal is to incentivise private-sector uptake of a CBDC. As previously reported, the Bank of Japan’s CBDC pilot tests are expected to be completed by March 2022.