Featured Product

    BOJ Publishes Approach to Development of Central Bank Digital Currency

    October 09, 2020

    BOJ published its approach to a "general purpose" central bank digital currency (CBDC), which is a digital currency that is intended for a wide range of end-users, including individuals and firms. Although BOJ has no plan to issue CBDC, from the viewpoint of ensuring the stability and efficiency of the overall payment and settlement systems, the central bank considers through preparation to be important to respond to any change in circumstances. If CBDC were to be issued, extensive and large-scale efforts would need to be made, including an exploration of information technology systems and institutional arrangements.

    There are two main variants of CBDC, namely "wholesale" CBDC and "general purpose" CBDC. Expected functions and roles of a general purpose CBDC, if introduced in Japan, include introducing a payment instrument alongside cash, supporting private payment services, and developing payment and settlement systems suitable for a digital society. Even if BOJ were to issue a general purpose CBDC, it would be appropriate to maintain a two-tiered payment and settlement system of a central bank and the private sector. This means that CBDC would be issued indirectly through intermediaries. In issuing CBDC, careful consideration is required for the functional requirements and economic design of CBDC from the perspective of the effectiveness of monetary policy and financial stability. It is desirable to ensure that CBDC could be used for cross-border payments while thoroughly monitoring developments in each central bank. BOJ will continue to make the necessary preparations to respond to changes in circumstances in an appropriate manner. The planned next steps include the following:

    • BOJ will explore the general purpose CBDC in a more concrete and practical way by conducting experiments, rather than confining itself to conceptual research as before. BOJ will first test the technical feasibility of the core functions and features required for a CBDC through a Proof of Concept (PoC). It will then consider the need for a pilot program if necessary. In the Proof of Concept Phase 1, BOJ will develop a test environment for the CBDC system and conduct experiments on the basic functions that are core to CBDC as a payment instrument. In the Proof of Concept Phase 2, BOJ will implement additional functions of CBDC in the test environment developed in Phase 1 and test their feasibility. BOJ aims to start Phase 1 in early fiscal year 2021.
    • In tandem with experiments, BOJ will proceed to successively explore topics such as cooperation and role-sharing arrangements between a central bank and payment service providers, economic design of CBDC, privacy protection and handling of end-user information, and standardization of information technology relating to digital currency.
    • BOJ will continue to deepen understanding of the core features of a CBDC and their impact on practices, while closely coordinating with other central banks, and to use the information obtained in its CBDC exploration. BOJ will emphasize the application of the knowledge of various stakeholders in considering CBDC issuance.

    Keywords: Asia Pacific, Japan, Banking, CBDC, Digital Currency, Cross-Border Payments, Central Banks, PMI, BOJ

    Related Articles
    News

    UK Authorities Consult on Implementation of Basel 3.1 Standards

    The UK authorities have published consultations with respect to the Basel requirements for banks. The Prudential Regulation Authority (PRA) published the consultation paper CP16/22 on rules for the implementation of Basel 3.1 standards.

    November 30, 2022 WebPage Regulatory News
    News

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News
    News

    FSB and NGFS Publish Initial Findings from Climate Scenario Analyses

    The Financial Stability Board (FSB) and the Network for Greening the Financial System (NGFS) published a joint report that outlines the initial findings from climate scenario analyses undertaken by financial authorities to assess climate-related financial risks.

    November 15, 2022 WebPage Regulatory News
    News

    FSB Issues Reports on NBFI and Liquidity in Government Bonds

    The Financial Stability Board (FSB) published a letter intended for the G20 leaders, highlighting the work that it will undertake under the Indian G20 Presidency in 2023 to strengthen resilience of the financial system.

    November 14, 2022 WebPage Regulatory News
    News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News
    News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News
    News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News
    News

    EU Finalizes Rules Under Crowdfunding Service Providers Regulation

    The European Union has finalized and published, in the Official Journal of the European Union, a set of 13 Delegated and Implementing Regulations applicable to the European crowdfunding service providers.

    November 08, 2022 WebPage Regulatory News
    News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News
    News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8597