Experimentation With Domestic CBDC To Begin In Spring 2021: BOJ Governor

Experimentation with domestic CBDC to begin in spring 2021. Bank of Japan is taking a nimble-footed approach for the preparation of CBDC. In his latest remark published on Tuesday, Bank of Japan Governor Kuroda Haruhiko felt the lack of commitment on the institution not having a current solid plan for the CBDC issuance.

The bank has already initiated to start the first phase of testing phases for its CBDC proof-of-concept in October 2020. Haruhiko has announced to begin the plans in the spring of this year.

The governor emphasized that, as per a Bank of International Settlements report, 86% of central banks globally are currently exploring the gains and losses of CBDCs. Of these, 60% are already at an experimental or proof-of-concept stage of development. Haruhiko noted:

Central banks share the view that it is not an appropriate policy response to start considering CBDC only when the need to issue CBDC arises in the future.

Haruhiko said that:

From the viewpoint of ensuring the stability and efficiency of the overall payment and settlement systems, we consider it important to prepare thoroughly to respond to changes in circumstances in an appropriate manner.

Keeping a note on the significant changes that are undergoing in the digital space, he directed the bank on taking the chance to carefully monitor the number of approaches for prospective changes in the provision of CBDC

Haruhiko went on grouping these upcoming approaches under the theme of “Central Banking-as-a-service”, where he happened to argue “as-a-service”, being an upcoming trend in finance, thus playing as an interchange from earlier developments in the field of corporate and software areas, focussing a shift on building business models that work on keeping the customer demand in priority rather than focussing on the product.

He summarized:

Everything as a Service, now spans phenomena such as mobility-as-a-service (purchasing a mobility service rather than a car) and infrastructure-as-a-service, which increasingly makes it redundant for firms to own certain hardware. In the framework of finance. There is also a recent trend toward unbundling financial services that financial institutions used to provide as tightly coupled, thereby enabling componentized financial services to be combined with services of non-financial firms. This is referred to as ‘Banking as a Service’ also known as embedded finance.

Monitoring innovations across public and private finance, the Bank of Japan in cooperation with the Bank for International Settlements and five other major global banks have been closely involved in CBDC research since January 2020 involving the facilities of implementing offline facilities on supporting a digital currency.

Source: Cointelegraph | Image: zeebiz.com | tribune.net

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