FameEX Hot Topics | Governor of Bank of Japan Expresses Confidence in CBDC Coexisting with Various Payment Methods
Bank of Japan Governor Haruhiko Kuroda recently delivered a speech titled "Evolution of Payments: Payment Systems for Neoteric Individuals," where he praised the potential of Central Bank Digital Currencies (CBDCs) in enhancing consumer payments. Kuroda emphasized that CBDCs not only improve user convenience but also play a crucial role in promoting financial inclusivity and cross-border payments. Kuroda acknowledged the ongoing competition between various payment instruments, such as stablecoins, cash, bank deposits, and digital currencies. He emphasized the importance of building on the strengths of these payment forms to ensure the payment system remains safe, efficient, and resilient over time. According to Kuroda, central banks' payment options should lead the way in maintaining uniformity and facilitating peaceful coexistence among various payment methods.
The Bank of Japan (BoJ) governor explained that when central bank money, which provides the unit of account, can be converted seamlessly between other forms of money, it ensures the uniformity of the currency. In other words, maintaining a situation where "one yen is one yen" regardless of the payment instrument used.
The BoJ is preparing to launch a CBDC pilot in April, following consultations that began in 2020. This move will involve increased collaboration with several private sector firms. The digital yen pilot will not be entirely centralized; instead, it will be divided into different systems for improved efficiency, largely building on the previously concluded Proof-of-Concept (PoC) stage. Uchida Shinichi, an executive director at the BoJ, mentioned that they plan to test the end-to-end process flow and identify potential challenges and measures for connecting the experimental system with external ones.
In line with Kuroda's statement about ensuring healthy coexistence between multiple payment systems, Japan's Financial Services Agency (FSA) announced plans to lift the ban on foreign stablecoins, allowing their listing on local exchanges in the country. However, the FSA emphasized that only stablecoins meeting the regulatory agency's requirements would be permitted to list. Initial plans to lift the ban began in December 2022, followed by a month-long public consultation, with insiders suggesting June 2023 as a tentative date for the ban's removal.
In conclusion, Governor Kuroda's speech highlights the importance of collaboration and adaptation in the financial industry, as well as the need to embrace new payment technologies like CBDCs. By fostering the coexistence of multiple payment systems, central banks can ensure a safer, more efficient, and resilient financial landscape for all. As the BoJ prepares to launch its CBDC pilot, it showcases its commitment to innovation and its readiness to navigate the evolving world 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.