Japan Must Revise Existing Law to Accommodate CBDC, Says Top Official

Japan must make amendments to its current laws before it can move forward with developing its Central Bank Digital Currency (CBDC) believes Kozo Yamamoto. This is as the Asian nation looks to kick start research towards launching a CBDC in the future.

Japan Official Wants Changes to Inflation Rate in Current Bank of Japan Laws

Yamamoto a former finance official and head of the Liberal Democratic Party’s council on financial affairs believes that the nation’s parliament must revise a law stipulating the Bank of Japan’s (BOJ) responsibilities regarding the development of the proposed CBDC.

Speaking to Reuters, he added that the recommendations include adding job creation to the current mandate of the apex bank and revising existing Boj laws to include provision for inflation rates.

“Like the U.S. Federal Reserve, the BOJ should set job creation and inflation as its mandate ..The new law should also clarify that 2% inflation is the BOJ’s policy target,”  he said.

Yamamoto’s statements come in the aftermath of the official announcement by the BOJ regarding its plans to perform a proof of concept test for the digital yen in 2021.  This came as a surprise to some industry insiders due to the initial stance taken by the apex bank regarding CBDC.

It is understood that the Japanese government took the launch of its CBDC seriously following China’s relentless pursuit of launching a CBDC in the nearest future. This was partly confirmed when the vice-finance minister for Japan gave a warning regarding the potential risks of China having a first-mover advantage in issuing a CBDC.

A Global Race to Launch CBDC

The year 2020 has seen a renewed push towards the development of CBDCs by central banks across the world. The recent European Union report that allowed member countries to trial a digital Euro has seen a huge momentum swing within the region.

Estonia became the latest European country to begin testing its CBDC according to a report from BTCManager.  Its apex bank, Eesti Pank revealed on October 6 that it had embarked on a partnership with tech firms SW7 Group and Guardtime to research the technical suitability of the technology required to run its CBDC.

In Asia, South Korea has also laid out plans to begin testing the proposed digital currency at the start of 2021. This test is part of the last phase of the 22-month pilot test program that began in February 2020.

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