With finance ministers and central bank governors having recently discussed cryptocurrency regulations at the G-20 summit, Japan is taking notice at home. Leaders at the Bank of Japan (BOJ), Ministry of Finance (MOF), and Financial Services Agency (FSA) have held a number of meetings to determine whether the country should become next in line to adopt a government-sanctioned digital currency.
The issues under discussion include how the Japanese government embracing a central bank digital currency (CBDC) would impact the world economy. Despite the rise of numerous crypto exchanges, the U.S. dollar continues to be the de facto global currency.
Japan has always been a leader for cryptocurrency
As the birthplace of cryptocurrency, Japan has often been ahead of the global pack when it comes to utilizing blockchain technology. Its economy might well benefit most from adopting a digital currency. However, like other countries, it is facing the same concerns over hacking, financial crimes, and money laundering as such currencies become more widespread.
The latest meeting to address such issues was held in January. Among those in attendance were Ryozo Himino, FSA vice minister for international affairs, Yoshiki Takeuchi, vice minister of finance for international affairs, and Shinichi Uchida, BOJ executive director for international affairs.
The BOJ in particular plans to be prepared for issues related to Japan adopting a digital currency. Governor Haruhiko Kuroda previously stated there was no demand for a state-sanctioned digital currency in Japan, but still recognized one could arise once the regulatory challenges and risks were properly addressed:
“We are advancing research and study from the technical and legal perspectives so that we will be able to move in an appropriate way when there is a growing need.”
Other countries are well on their way to adopting digital currency
Developments abroad may be fueling these discussions in Japan. The People’s Bank of China began a two-year pilot program to assess digital yuan transactions. Beijing has made it clear any digital currency in China would complement the yuan, not replace it.
The Bank of England, the European Central Bank, and central banks in Sweden, Canada, and Switzerland have announced they would conduct a joint study on digital currencies with the Bank for International Settlements. Meanwhile, the U.S. Internal Revenue Service is preparing to hold a cryptocurrency summit in March.