While Japan’s plans for a commercial central bank are still in the research stage, Shinichi Uchida, CEO of the Bank of Japan (BOJ), said simplicity will support the mission of designing a digital yen for the central bank.
According to Reuters, Uchida made the announcement during a speech on Friday calling for an environment that would allow central bank digital currencies to co-exist with existing private payment channels.
For Uchida, the vertical integration of the digital yen into the private sector payments matrix will require a simple CBD design.
Part of this simple design could include building an infrastructure that allows people to use both CBDCs and electronic payment services from a single wallet, enabling seamless switching between the two channels.
Uchida said that vertical integration will encourage the private sector to adopt the BOJ’s digital currency and thus lead to the creation of more valuable services.
As previously reported by Cointelegraph, the Bank of Japan has begun preliminary evidence of concept studies on the possibility of issuing cryptocurrency digital currencies. The second phase of digital yen research will begin in the second quarter of 2022.
Japan is one of several countries in the Asia-Pacific financial scene that are exploring the benefits of a central bank floating digital currency, especially after the digital payments project in China.
On the subject: BOJ Governor Says CBDC Setup Cannot Wait Long Hours
In March, the Bank of Japan announced the creation of a Liaison and Coordination Committee, which will include representatives from the public and private sectors tasked with collaborating on the CBDC’s digital yen pilot project.
Japanese CBDC studies may also include exploring ways to ensure cross-border interoperability with other sovereign digital currencies, perhaps as a countermeasure to the Chinese digital yuan in the international arena.
International cooperation within the framework of digital central bank currencies is also emerging as an important area for many countries developing their own national digital currencies.
Meanwhile, global financial institutions such as the Bank for International Settlements continue to push for the use of CBDCs to counter the proliferation of cryptocurrencies.