Familiarity with the digital yen concept is very low in Japan. Only 3.1% of consumers surveyed said they knew about a central bank digital currency (CBDC). Another 20% saying they’d heard of it but didn’t know much. That compares to a U.S. CBDC survey that showed recognition by around half of the U.S. population. That was before the recent U.S. campaign mentions of the topic. Bank of Japan Governor Kazuo Ueda revealed the Japanese figures during a speech today.
He also had a slightly different spin when comparing a CBDC to cash. Firstly, he noted that a CBDC is intangible compared to tangible cash, and hence it ‘transcends space’. Because there’s no need for physical presence for payments, a CBDC is usable for a broader range of payments than cash.
The second point is that physical cash takes up space, whereas the digital version does not. The Governor characterized this space issue as a disadvantage and inconvenience of cash. However, the small digital storage for a CBDC is more similar to commercial bank money than cash. Hence, he noted the risk there could be flows from banks to CBDC and highlighted that many countries plan to impose CBDC holding limits.
Thirdly, CBDC data has a digital footprint which “generates opportunities to leverage data.” However, Governor Ueda acknowledged the privacy concerns. The fact that a CBDC can be used without needing a physical presence means that a CBDC has greater money laundering risks than cash. At the same time, the central bank recognizes concerns that citizens might have if the government has access to their private details. Hence, it aims to minimize the data accessible by the central bank.
Japan’s digital yen status
Meanwhile, the Bank of Japan entered a CBDC pilot phase in April 2023 to test the technical feasibility of a digital yen. One major difference between Japan and many other countries is regulated digital currency initiatives in the private sector are more advanced. DCJPY is a deposit token initiative that plans to launch in the middle of this year. On the stablecoin front, MUFG and other banks are enabling stablecoin issuance via the Progmat Coin platform.
