It’s a classic case of Yin and Yang. While India piloted its digital rupee Central Bank of Digital Currency (CBDC) last week, the Bank of Japan (BoJ) is now part of an experiment working towards the creation of a digital Yen. Japan is collaborating with three large banks including local banks to conduct a CBDC project, Nikkei, a regional news agency reported last month. “Blockchain and decentralisation are required for CBDC success,” Sankhanath Bandyopadhyay, economist, and CBDC expert, told FE Blockchain.
The report further stated that in a collaboration with major private banks and other national organisations the Bank of Japan’s main focus would be to handle issues related to customer deposits and withdrawals.
Meanwhile, China continues to lead the CBDC race globally. “As of January 2022, 261 million users have already set up digital wallets for the 2-CNY, which has recorded transactions worth $13 billion,” Punit Agarwal, founder, KoinX, a cryptocurrency exchange, said.
Meanwhile, RBI’s CBDC can enhance the efficiency of cross-border payments as well as provide an alternative to correspondent banks. “This indicates the consistent efforts on the part of RBI to bring out an efficient, user-friendly mechanism of digital currency far ahead of other central banks across the world,” Jyoti Prakash Gadia, managing director, Resurgent India, Securities and exchange board of India (SEBI) registered category, explained.
The report further noted that Japan’s central bank will experiment with CBDC for two consecutive years which will involve the offline functionality of Japan’s CBDC, keeping the main focus on payments without the Internet.
It is to be further noted that not all countries are in mood of launching CBDC, few countries are still reluctant. Countries such as Ecuador, and Denmark, list potential risks for the non-government sectors and other financial reasons. “Each country had its own certain reasons to stay away from it. If we speak about Finland, after dropping its CBDC project, the country seems to have a pan-European digital currency. In August, Finland talked about the adoption of a digital Euro,’ Bandyopadhyay added.