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A senior official of Japan’s ruling party has urged the country’s regulators to revise laws to allow the Bank of Japan to develop a Central Bank Digital Currency (CBDC).
Kozo Yamamoto, head of the Liberal Democratic Party’s (LDP) council on financial affairs, said in a report today published by Reuters that the government must act quickly towards issuing its digital currency or risk being overtaken by privately owned crypto projects.
Yamamoto stated that if a private firm in the country launches a widely acceptable cryptocurrency, people may not need to adopt the yen currency in payment.
“This is fundamentally about protecting Japan’s currency sovereignty,” Yamamoto added.
According to Yamamoto, revising the BOJ laws to include the digital yen would create an avenue to reform the bank’s existing mandate and enshrine its price stability target of 2% inflation.
Despite launching its 2% inflation target in 2013, the country’s apex bank did not specify it under the BOJ laws but has since introduced various unconventional monetary policy tools to achieve price stability in the financial system.
Yamamoto believes that the revised laws could help provide clarity on Japan’s inflation target.
Committed to ensuring Japan’s financial system’s stability and eliminating threats posed by crypto-related firms, Yamamoto disclosed that he would continue to urge the government and other relevant agencies to revise the BOJ laws to develop the digital yen.
Japan has no plans to issue CBDC
Japan is one of the countries currently researching the benefits of issuing a digital currency. The BOJ published a report last year highlighting the pros and cons of CBDCs, and the methods of distribution it could adopt should it choose to launch its digital currency.
However, the country may have no interest in launching a CBDC. Japan stated that its research about CBDC does not imply it would launch the project anytime soon.
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