This digital yen probably set its bases on Blockchain, and it intends to serve as a bridge between the traditional financial ecosystem and the dawn of new technologies in Japan.
A group of more than 30 reputable financial institutions in Japan indicated that they will participate in a local experiment, in which they will test the usefulness of a digital yen for institutional operations.
This is a report by Reuters news agency, in which they indicate that the group of institutions would be made up of several banks, brokerage companies, public sector companies, representatives of the telecommunications ecosystem, and some entities retailers.
Institutions to test yen digital in Japan
In this regard, the president of the group of institutions that will participate in this experiment, Hiromi Yamaoka, indicated that private banks will be in charge of issuing the digital currency, among which are institutions such as MUFG, Sumitomo Mitsui, and Mizuho in charge of this responsibility.
In this vein, Yamaoka assured that the idea is to streamline and make the process more practical since the country has other digital payment platforms that, by themselves, do not meet the expectations to put aside payments with cash:
“What we want to do is create a framework that can make various platforms compatible with each other… [but] The fundamental and the more delicate question is how to ensure that private deposits and a CBDC coexist. We do not want money to rush out of private deposits, and it would not make sense to issue a CBDC if it’s not widely used. “
Regarding this initiative, Yamaoka said that due to the existing problems and challenges surrounding a CBDC, the idea is to guarantee cooperation between the central bank and the private sector to conduct this initiative.
What are the expectations for Japan?
Although the country appears as one of the most technologically prominent nations in the world, economists and analysts emphasize that in financial matters, the Asian nation has found it difficult to put cash as a second option since the digitalization of payments is not yet widely adopted by residents.
There are currently several operating companies for digital payment services but the group expects is to generate something enough competitive to displace the latter, managing to generate greater traction than applications such as PayPal, which operations go mainly through smartphones.
Among the challenges in the prevention from becoming a data silo, which is why there is talk of a two-layer digital currency that bases its policies on the use of Blockchain, without neglecting aspects that involve the use of smart contracts to maximize other types of financial court use cases.
A statement published by the group reads:
“This two-layer digital currency will not conflict with existing payment instruments … It is expected that this initiative can improve interoperability between these platforms by creating bridges”.
By: Jenson Nuñez.
