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FameEX Hot Topics | Bank of Japan's Governor Asserts CBDC's Potential to Harmoniously Coexist with Other Payment Forms

2023-03-31 11:51:40

In a recent speech titled "Evolution of Payments: Payment Systems for Neoteric Individuals," Bank of Japan Governor Haruhiko Kuroda highlighted the potential of Central Bank Digital Currencies (CBDCs) to transform consumer payments. Kuroda emphasized that CBDCs not only enhance user convenience but also play a vital role in fostering financial inclusivity and streamlining cross-border payments.

Governor Kuroda recognized the ongoing rivalry among different payment instruments, such as stablecoins, cash, bank deposits, and digital currencies. He stressed the need to capitalize on the strengths of these payment methods to maintain a secure, efficient, and resilient payment system over time. Kuroda believes that central banks' payment options should pave the way for uniformity and harmonious coexistence among various payment methods.
Kuroda explained that the seamless conversion of central bank money, which serves as the unit of account, between other forms of money is crucial for ensuring currency uniformity. This means that "one yen is one yen" regardless of the payment instrument utilized.

Following consultations that began in 2020, the Bank of Japan (BoJ) is gearing up to launch a CBDC pilot in April. This initiative will involve increased collaboration with several private sector firms. Instead of being wholly centralized, the digital yen pilot will be partitioned into distinct systems for enhanced efficiency, largely drawing from the previously concluded Proof-of-Concept (PoC) stage. Uchida Shinichi, an executive director at the BoJ, revealed plans to test the end-to-end process flow and pinpoint potential challenges and measures for integrating the experimental system with external ones.

In accordance with Kuroda's emphasis on promoting the healthy coexistence of multiple payment systems, Japan's Financial Services Agency (FSA) announced its intention to lift the ban on foreign stablecoins, enabling their listing on local exchanges. However, the FSA clarified that only stablecoins complying with the regulatory agency's requirements would be allowed to list. The initial plans to lift the ban commenced in December 2022, followed by a month-long public consultation. Insiders have suggested June 2023 as the tentative date for lifting the ban. In conclusion, Governor Kuroda's speech underscores the significance of cooperation and adaptability in the financial sector, as well as the necessity to adopt new payment technologies like CBDCs. By nurturing the coexistence of multiple payment systems, central banks can guarantee a more secure, efficient, and resilient financial environment for all. As the BoJ gets ready to launch its CBDC pilot, it demonstrates its dedication to innovation and its preparedness to explore the ever-changing landscape of digital finance.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.

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