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Bank of Japan Testing Digital Yen CBDC

The Bank of Japan (BoJ) has just announced that it will begin experimenting with a Digital Yen, its own Central Bank Digital Currency (CBDC) to test its technical application and feasibility.

Although no timetable for Japan’s CBDC experimentation has been revealed, this is the first announcement by the BoJ that it will commence a Proof of Concept (PoC) process with the Digital Yen.

The BoJ published a report called Technical Hurdles for CBDC, in which the bank disclosed that it would check the feasibility of CBDC from a technical perspective while continuing to collaborate with other central banks that are also in development.

Two Technical Issues Identified

According to the report, the BoJ identified two major technical issues to overcome with its CBDC—universal access and resilience.

One is universal access, which as the name implies is to grant access to everyone including those who do not use smartphones. Surprisingly, in a country known for cutting edge tech, Japan’s smartphone penetration sits only at around 75% today, according to the Communications and Information Network Association of Japan.

The second issue referred to in the BoJ report is called “Resilience”—referring to accessibility to the Digital Yen offline in the event of a power outage or natural disaster.

Will the Digital Yen use Blockchain?

The report highlights the BoJ’s considerations of incorporating blockchain technology in its CBDC plans. The paper states that a centralized system that does not include DLT has larger capacities and are generally much faster as the transactions do not need consensus—but this opens up the entire system to a single point of failure which can be attacked or could disrupt the entire system if it goes down.

On the flip-side, a blockchain-based CBDC will be immune to a single point of failure and be capable of “resilience” but is generally slower as consensus must be achieved across the decentralized network.

Curbing China’s DCEP

Bank of Japan (BoJ), the nation’s central bank is aiming to create a digitized Yen to curb the potential influence of China’s own CBDC development—the Digital Yuan or Digital Currency Electronic Payment (DCEP). There have been many reports that China is already actively testing its DCEP across a range of civilians, government employees, and even some global organizations within the mainland.

In February, six central banks around the world came together to create a working group to share experiences on use cases on central bank digital currency (CBDC). With significant expertise in exploring digital currencies, these six central banks are the Bank of Canada, Bank of England, Bank of Japan, European Central bank, Sveriges Riksbank in Sweden, and the Swiss National Bank, along with the Bank for International Settlements (BIS).

It was reported that Japan has also requested support from the US Federal Reserve to get in front of China. Norihiro Nakayama, the Vice-Minister for Foreign Affairs in Japan was quoted saying that he wishes the “Federal Reserve would partner with six other central banks including the Bank of Japan in studying digital currencies.”

Jul 13 Trading Analysis: Dont confuse the lack of volatility with stability

Trading Crypto with Eugene is a series of daily commentary of market analysis and trading advice shared by Eugene Ng of Matrixport, a veteran trader with 10 years of experience in top-tier global investment banks. If you like the article, please follow us here on Blockchain.News so you won’t miss our future publications.

BTC has been relatively unaspiring this weekend as ALTs continue to steal the limelight with LINK, Tezos, and Defi names making good gains. For example, ChainLink has hit an all-time high over the weekend with the market pundits citing near record network usage and mainstream adoption (over 45 partners since April). Staking and DeFi names also put on a good show and isnt surprisingly given the low vol environment in BTC. For DeFi, over $2bn has been locked across the various platforms this weekend and wrapped BTC on ETH has now exceeded $100 million. ETH however has been rather dull with headlines over the weekend that ETH 2.0 Phase 0 may not go live until 2021.

In macro-land, this week, we got EU summit on Friday – leaders will discuss the recovery fund, ECB and BoJ and others make their latest monetary policy decisions, U.S. earnings season kicks off with banks kicking off this Tuesday and China’s Q2 economic data. Despite Florida’s biggest daily increase in Covid19 cases, Saudi Arabia proposing to reduce cuts in Oil, and continued US-China rhotheric over the weekend (from trade war to tech), we are still heading into the week “risk-on” with U.S. equity futures showing an uptick in early Asia trading. Strategy: Continue to load up BTC options 8-8.5k puts and 10-10.5k calls. While I am a little surprised that it’s been risk-on from Monday open, I’ll be a little cautious on where we head in the next few days. Gdluck, and speak to me if you want to discuss trade ideas.$9,350 should see some stops and potential leg higher in BTC… May be temporary and highly dependent where S&P 500 moves this week....

More than $2bn locked across various platforms in DeFi…

DisclaimerOpinions expressed are solely the analyst’s own and do not express the views of Matrixport the company.The views and opinions expressed in this article are those of the contributor and do not necessarily reflect the view of Blockchain.News.

Japan Will Include Central Bank Digital Currency in Honebuto Economic Plan

The Japanese Government has continued its acceleration towards a Central Bank Digital Currency (CBDC) and is set to include its consideration in its formal economic plan.

In a report from Nikkei on July 14, Japanese officials will continue to consider and discuss a CBDC in their official Honebuto Plan for Economic and Fiscal Revitalization. The Japanese government plans to discuss and consider the CBDC while coordinating with other countries, according to the media outlet.

The Honebuto Plan was designed to change the basic structure of politics, expressly in relation to economic and fiscal policy. The announcement of CBDC inclusion demonstrates how serious the discussion in Japan has now become.

Japan Accelerates Towards CBDC

The news of the inclusion of Central Bank Digital Currency in the Honebuto Economic Plan has come just one week after the Bank of Japan (BoJ) announced it will commence a Proof of Concept (PoC) process with the Digital Yen.

Although no timetable for Japan’s CBDC experimentation has been revealed, the BoJ published a report called Technical Hurdles for CBDC, in which the bank disclosed that it would check the feasibility of CBDC from a technical perspective while continuing to collaborate with other central banks that are also in development.

According to Nikkei, it will be the Japanese government, however, and not the Bank of Japan, that will have the final say on whether or not to issue CBDC.

Curbing China’s DCEP

As reported by Nikkei, in the Honebuto policy, it was stated that the BOJ PoC experiments “will be examined in cooperation with each country.” In this regard it was previously announced in February, that six central banks around the world came together to create a working group to share experiences on use cases on central bank digital currency (CBDC). With significant expertise in exploring digital currencies, these six central banks are the Bank of Canada, Bank of England, Bank of Japan, European Central bank, Sveriges Riksbank in Sweden, and the Swiss National Bank, along with the Bank for International Settlements (BIS).

Bank of Japan Sets Up New Research Team For Digital Yen CBDC Development

Japan’s central bank announced that it has set up a new research team to dive deeper into Central Bank Digital Currency (CBDC) experimentation and development. The Bank of Japan (BOJ) is possibly preparing for a CBDC, given the recent rising demand for classless payments and growing interest among other central banks.

The New Team to Explore the Use of CBDCs

The new team would follow up on the Bank of Japan’s efforts on CBDCs, as well as on joint research that the central bank has been carrying out with other major central banks since January. In other words, the new team is set to take over from a previous working (research) group, which was created in January this year to look into the feasibility of a national CBDC. Furthermore, the team would continue doing research work undertaken with other leading central banks.

The team would belong to the central bank’s payment and settlement systems department.

Since the beginning of this year, Japan’s central bank has been formally researching CBDCs when it partnered with five major central banks, including the Swiss National Bank, the European Central Bank, the Bank of England, the Sveriges Riksbank (Sweden), and the Bank of Canada. The formation of the new team indicates that the Bank of Japan is determined towards CBDCs.

A New Deal for Japan

The news comes just a few days when Japan’s government said it is contemplating issuing a national digital currency by including the plan in its policy framework. The move to include such a plan in the country’s policy framework would make the issuance of a CBDC as part of this year’s government policy.

Although the Bank of Japan has previously stated it has no immediate plans to issue a digital yen, the recent breaking news indicates urgency. Japan’s central bank is shifting towards embracing technology as China appears to be moving quickly to launch its own CBDC. Japan’s lawmaker, Norihiro Nakayama, once stated that Japan would require support from the US to curb the influence of China’s digital currency.

Bank of Japan Puts Top Economist in Charge of CBDC Development

Bank of Japan’s top economist, Kazushige Kamiyama is now the head of payments and settlements and at the helm of Japan’s exploration of its Central Bank Digital Currency (CBDC) project.

The Bank of Japan announced today, July 31, that it has appointed its lead economist, Kazushige Kamiyama to lead its payments and settlements department which is currently heading up CBDC exploration for the central bank.

Seisaku Kameda will succeed Kamiyama as the Bank of Japan’s top economist and head of its statistics department.

The Race for CBDC Control

The announcement of Facebook’s Libra has been the catalyst for central bank digital currency exploration the world over. While Bitcoin has suffered in terms of rates of adoption, the idea that a non-sovereign currency might be issued by an entity with over 2 billion users, has galvanized the world’s central banks into creating their own version of digital currency.

In particular, China launched full steam ahead into its own central bank currency to ensure Libra would be crushed—if it was ever able to pass the regulatory hurdles being thrown at it by every authority on the planet. The US has been much slower off the mark and is still discussing its own digital dollar, while China is now in the testing phase.

The realization that a CBDC may be the key to taking further control of the global markets, has further accelerated Japan’s venture into the space and the Bank of Japan has been experimenting along with six other central banks in the hopes to curb China’s growing influence.

Japan Accelerates Towards CBDC

As recently reported by Blockchain.News, the Japanese Government has continued its acceleration towards a Central Bank Digital Currency (CBDC) and it has included it as a consideration in its formal economic plan.

The news of the inclusion of Central Bank Digital Currency in the official Honebuto Economic Plan came just one week after the Bank of Japan (BoJ) announced it will commence a Proof of Concept (PoC) project with the Digital Yen.

Ultimately it will be the Japanese government, however, and not the Bank of Japan, that will have the final say on whether or not to issue CBDC.

Bank of Japan to Launch CBDC Proof-of-Concept in 2021

The Bank of Japan (BOJ) has revealed its plan to kick start a proof-of-concept phase on the issuance of its central bank digital currency (CBDC) next year. The nation’s central bank reported that it was preparing its issuance capabilities in case of a surge in public demand for digital currency rose rapidly.

Resilience is of the Key

The BOJ report noted that one of the fundamental features of the CBDC would be resilience, even when faced with unforeseeable circumstances like power outages and network failures. It stated:

“Offline use in times of system and network failures, as well as electrical outages, is also important for Japan, given the frequent occurrence of natural disasters.”

As a result, the digital currency will have offline capabilities making it more durable. The early experimentation phase will entail generating a test environment to check its functionality as a payment apparatus.

In July, the BOJ disclosed that it had identified two technical stumbling blocks in the issuance of its digital currency, namely resilience and universal access. Therefore, it seems it has set its eyes on overcoming the resilience challenge, having put the early testing phase in line.

Universal access entails granting entry to everyone, including those who do not use smartphones. The Proof of Concept testing is expected to tackle this technical hitch as it will ensure that the digital Yen is accessible, just like regular currency. Additionally, it will guarantee the availability of the asset should there be a natural disaster.

Stamping authority in the global markets

In the eyes of many nations owning a CBDC is instrumental in having control of the global markets. This can be shown by the fact that the Bank for International Settlements (BIS), along with seven central banks, recently released a report identifying the foundational principles necessary for any publicly available CBDCs to help central banks meet their public policy objectives.

One of the principles highlighted the importance of CBDCs coexisting with cash and other types of money in an innovative and flexible payment system.

The BOJ has been making notable steps as it continues keeping a keen eye on the development of its digital currency. For instance, in July, it announced the appointment of lead economist Kazushige Kamiyama to head the payments and settlements department, which is at the helm of Japan’s exploration of its CBDC project.

Bank of Japan Wants to Hear From Public About Digital Yen Development

Kazushige Kamiyama, the head of the Bank of Japan (BOJ)’s payment and settlement systems department, announced that for the anticipated national digital currency to become a reality, it must be supported by the public.

Kamiyama stated:

“There is no conclusion yet. At the end of the day, there’s no way we can proceed without gaining sufficient understanding from the Japanese public.”

Kamiyama said that for Japan’s Central Bank to launch a Digital Yen, it needs to ensure that that the central bank digital currency (CBDC) can complement physical cash and other types of electronic payments systems. In addition, CBDC also needs to strengthen the transactions ecosystem for commercial banks and other financial companies, without just serving as a tool that the BOJ uses to achieve its monetary policies.

Kamiyama mentioned:

“We have clearly stated that banknotes and digital currency will coexist. The digital currency won’t be useful to deepen negative rates because there will be banknotes to which the rates can’t be applied.”

Japan and China Rushing to Issue CBDCs

The recent announcement by Kamiyama comes at a time when Japanese lawmakers have been pushing the government to launch its own digital yen. The urge for the country to develop its own CBDC comes as a result of China’s digital currency electronic payment (DCEP) development. The news of the potential launch of China’s DCEP has pushed Japan to realize the benefits and significance of a potential central bank digital currency issuance.

The BOJ said that to keep up with technology, it would collaborate with private sectors and the government to further research on digital currency. Japan’s Central Bank aims to modernize and upgrade the financial industry to cope with changing global financial development.

China has been ahead of other major countries in experimenting on a CBDC as it focuses on becoming the first nation to launch a digital currency to reduce its dependence on the world’s main reserve currency (the U.S dollar payment system). Early this month, the People’s Bank of China (PBoC) announced that it has processed more than 3 million transactions worth 1.1 billion yuan ($162 million) as part of its trial DCEP initiative.

While China seems to take the lead towards launching its DCEP, other major economies across the globe are examining the possibility of issuing their own CBDCs.

The Bank of Jamaica Suggests Court Order Approval Required for Tracking CBDC Transactions

The Bank of Jamaica (BOJ) suggests that the authority must obtain a court order to track Central Bank Digital Currency (CBDC) transactions apart from wallet holders and issuers, as CBDC such emerging digital currencies that do not have a separate code that can be traced.

Jamaica Observer reported Wednesday, citing the BOJ said the central bank digital currency (CBDC) has a digital footprint and therefore has tracking capabilities. It is necessary to protect data privacy for the customers.

The Central Bank of Jamaica outlines that:

“However, this information is not shared with the Bank of Jamaica and any other authority due to customers’ confidentiality and data protection. This information can only be shared under a court order. Bank of Jamaica will only capture general data for economic analysis.”

CBDC is a digital form of legal tender issued by the central bank of the country, which stands for Central Bank Digital Currency and represents the digital form of a nation’s fiat money (currency backed by trust or faith in the regulating government). Unlike traditional cryptocurrencies, cryptocurrencies are usually issued by private companies without the endorsement of the state. Therefore, Jamaica’s CBDC can have the same payment and savings functions as cash.

BOJ stated that due to the characters of its CBDC, it would circulate in a larger area without incurring the cost of producing banknotes and coins.

Jamaica’s Minister of Finance Nigel Clarke has announced that the country intends to launch its central bank digital currency (CBDC) in 2022.

As reported by Blockchain.News on August 11, the project, under development by the BOJ’s CBDC Team, has entered a pilot phase which will see a total of $230 million in CBDC minted and deposited with deposit-taking institutions and authorised payment service providers before December 2021.