Japan’s three largest banks as part of a group of 30 private sector actors, are ready to collaborate on an experiment with a digital yen. The group consists of banks, several Japanese brokers, telecommunications and utilities, and retailers.According to a Reuters report released on November 19.
For the purpose of the experiment Private banks are responsible for issuing the currencyAlthough the possibility of other actors being involved in the show is not excluded, according to the president of the new group, Hiromi Yamaoka. Yamaoka is a former executive director of Japan’s central bank, who in turn In the last few months he has dealt increasingly with the development of the digital yen.
Japan is known to be slow to accept cashless payments. Cash still makes up about 80% of total billing in the country, compared to 55% in the US and only 30% in China.
The main banks of Japan, Mitsubishi UFJ Financial Group, Mizuho Financial Group, and Sumitomo Mitsui Financial Group have previously developed custom digital payment systems, including digital tokens.
The idea of the new project, however, is is to avoid a “silo-like” platform and a fragmented digital payments landscape. Yamaoka said:
“Japan has many digital platforms, none of which are large enough to outperform cash payments. […] We want to create a framework that makes different platforms compatible with each other. “
Now private banks are developing a common settlement infrastructure for the experimental digital yenThose involved will likely hope that the combined effort can prove competitive enough compete with existing smartphone-based payment processing services such as PayPay, a joint venture between SoftBank, Paytm Y. Yahoo Japan.
Earlier this week Yamaoka identified the digital yen issuance challenges for both the Bank of Japan and private financial institutions, including the potential for large private bank deposit outflows. He commented:
“The fundamental and very sensitive question is how to ensure that private deposits and a CBDC coexist [moneda digital del banco central]. You don’t want money flowing out of personal deposits. On the other hand, there is no point in issuing a CBDC if it is not widely used. “
Yamaoka suggested addressing this problem along with the convenience and interoperability of different platforms requires extensive cooperation between the central bank and the private sector.