A yen-based digital currency, tentatively called “DCJPY” is being developed in Japan. A consortium of roughly 74 Japanese firms, including the country’s three mega-banks aims to launch the digital currency in fiscal 2022 after beginning trials in coming months.
Mitsubishi UFJ Financial Group, Mizuho Financial Group and Sumitomo Mitsui Financial Group are among the firms from a range of industries backing the Digital Currency JPY (DCJPY) project, which has been in the works since last year.
The consortium includes other lenders such as Japan Post Bank Co Ltd, brokerages and insurers, and non-financial firms such as Nippon Telegraph and Telephone Corp, Kansai Electric Power Co Inc and East Japan Railway Co. Some will participate in experiments to gauge such a currency’s use in industries ranging from energy to retail.
According to Reuters, the group has been meeting regularly since 2020 to discuss creating a new settlement platform for digital payments.
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 on Wednesday.
“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 Wednesday 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.
Within the public sector, the Bank of Japan has prioritized 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 incentivize private-sector uptake of a CBDC. As Cointelegraph reported, the Bank of Japan’s CBDC pilot tests are expected to be completed by March 2022.
According to Reuters, 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.
Nnamdi Maduakor is a Writer, Investor and Entrepreneur