The Bank of Japan will shape the implementation of its CBDC pilots following Sweden’s stable approach, not following China’s larger pilot programs. The officials also said that it will decide on issuance of CBDCs only by 2026.
Japan’s central bank, the Bank of Japan, has announced that it will model its central bank digital currency (CBDC) similar to that of Sweden, not China. Kazushige Kamiyama, the head of the bank’s payment systems department, disclosed this information in an interview.
The idea is to launch CBDCs in slow but steady phases rather than implementing large pilot programs from the very beginning. Kamiyama stated that the slow expansion of Sweden’s experiments bodes well for Japan, adding that,
“The structure and design of a central bank digital currency needs to be decided as part of the overall settlement system for the future.”
He also added that the study, conducted with the help of other central banks such as the United States Federal Reserve and the European Central Bank, would help eliminate any risks that come from having different CBDCs work together. The Bank of Japan is keen to ensure that the various CBDCs are compatible with each other.
However, the Bank of Japan is not guaranteed to launch a CBDC – it is still in the initial consideration stage. Sweden is also reviewing the prospects for a CBDC and is not sure if it will issue a digital currency. Bank of Japan Governor Haruhiko Kuroda says a decision on issuance of CBDCs will be made only by 2026.
Many countries will decide on CBDC in the coming years
About 90 countries are reviewing CBDCs, although this figure is likely to be higher. Governments are eager to reap the benefits and upgrade outdated financial systems.
China is the most high-profile of these governments, but that doesn’t mean other countries are lagging behind. In fact, several countries have seen their CBDC programs ramp up in recent months, and now everyone from India to the United Kingdom is working on it.
The United States has also disclosed that it will look at CBDCs, with the Federal Reserve saying it wants to reform the existing system. This, too, is far from guaranteed, but with the passage of time it becomes more likely.