Japanese media: Japan accelerates preparations for central bank digital currency to catch up with China

Japanese media said that the Bank of Japan will accelerate preparations to realize the issuance of digital currency by the central bank.

According to the Nikkei website on July 3, the Bank of Japan released a summary report on technical issues on the 2nd local time, and said it would conduct experiments to solve related issues. The demand for digital payments that do not use cash is rising, and countries such as China are promoting digital currency issuance plans, and the Bank of Japan is determined to catch up.

The report is the first round of results of the Bank of Japan's digital currency research group, which was established in February. The report points out that for the central bank's digital currency to be put into use, it must have the same functions as cash. Specifically, it needs to become "a payment method that everyone can use safely and securely anytime, anywhere."

What should be paid special attention to is the "universal access" function that everyone can use. Smartphones are widely used for current digital payments, but data from 2018 showed that the smartphone penetration rate in Japan was only 65%, and children and the elderly who do not have mobile phones cannot use them. Therefore, the report pointed out that "it is important to develop terminals that can be used by all kinds of users."

Another issue is to have "reliability" that can be used at any time without being affected by the environment. Electronic payment methods such as smartphones often require communication networks and power supplies, and there is a concern that they cannot be used in emergencies such as earthquakes. Digital currency needs to have the function of being able to pay in such an offline environment.

The report said that although it is currently possible to use wireless communication technology of smartphones for offline payments, the problem is how to accurately grasp the usage and take measures to prevent money laundering. This report proposes a plan to set an upper limit on the amount of offline payments.

After summarizing a series of topics, the Bank of Japan stated that it will explore the feasibility of central bank digital currency through empirical experiments.

It is reported that the Bank of Japan established a consultation platform called the "Future of Payment Forum" in February to cooperate with private enterprises in the payment field. The "Digital Currency Sub-Forum" established under it will hold its first meeting on July 30. The technical issues of central bank digital currency raised in this report are also topics for discussion.