Prominent financial official states it is very important for Japan to amend laws in order to issue a digital currency. Japan is now serious about rolling out state digital currency following the People’s Bank of China and other central banks.

The government of Japan will have to revise the law which makes the central bank responsible for creating a central bank digital currency (CBDC), says Kozo Yamamoto, head of the Liberal Democratic Party’s council on financial affairs. Yamamoto also worked as an official member of Japan’s Ministry of Finance.

According to Yamamoto, the Bank of Japan (BOJ) should follow the US Federal Reserve in considering “job creation and inflation as its mandate.”

Proof-of-Concept for Digital Currency

Recently, the Bank of Japan unveiled its plans to launch a “proof-of-concept” for digital currency in 2021. BOJ’s plan of proof-of-concept was explained in the report published on Oct.9.  In the past, the central bank claimed it had no intention to develop a digital yen.

Japan started to research about central bank digital currency after China’s outstanding progress in the development of digital yuan. Not only China, but many countries have also launched CBDC programs in response to China’s digital yuan and Facebook’s Libra.

According to the latest report, more than 70 central banks are in touch with central bank digital currency in one way or the other. For instance, the Philippines announced to test the feasibility of a digital currency in June 2020. The governor of the central bank set up the committee to check the practical implications of state digital currency.

Bank of Korea (BOK) also unveiled its 22-month pilot program consisting of three phases. The first phase has already been completed which involved testing of its underlying technology. The second phase involved the outside consultation in the development of digital currency. In the third phase, the Bank of Korea will work on testing and distribution of digital currency.

Deutsche Bank published a new report which discusses the effects as a result of the implementation of central bank digital currency (CBDC).