Japan must adapt its laws to issue the central bank’s digital currency, according to a local finance official.
Kozo Yamamoto, chairman of the board of the LDP’s Financial Affairs Council and former employee of the Ministry of Finance, believes that Japan should revise the law that gives authority and responsibility to the Bank of Japan (Bank of Japan) in relation to the development of the CBDC.
Yamamoto said potential changes to the Bank of Japan Act would be a good opportunity to consider other changes, such as adding jobs to the central bank’s mandate, according to a Reuters report released on October 12. The official also mentioned that the revised Bank of Japan Act should contain provisions on the rate of inflation:
Like the US Federal Reserve, the Bank of Japan must define job creation and inflation as its […] mandate. The new law should also clearly state that 2% inflation is a political goal for the Bank of Japan. ”
Yamamoto’s comments came shortly after the Bank of Japan formally announced plans to implement proof of the concept of the digital yen in 2021. The announcement comes as part of the Bank of Japan’s first joint report on the Bank of Japan, released on October 9. to this announcement, the Bank of Japan had said that it had no plans to launch a central bank digital currency in the near future.
Japan appears to be taking the central bank’s digital currency more and more seriously amid China’s massive gains in the digital yuan. On October 9, Japan’s Deputy Finance Minister for International Affairs warned the international community of the potential risk that China would benefit from a “first mover” advantage by issuing a central bank digital currency.