Japan, the third largest country by GDP, could be the next major economy to issue a national digital currency after the latest action by the Finance Ministry.
In April, Japan's Finance Ministry is set to launch an expert panel to examine the possibility of issuing a digital yen. In particular, the panel will attempt to create a framework for a national digital currency backed by the central bank.
The expert panel will rely on the findings of a technical study conducted by Japan's central bank over the past two years. Its launch coincided with the planned digital yen pilot program involving Japan's central bank, various financial institutions, and the private sector.
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The Japanese central bank does not have immediate plans to issue a central bank digital currency (CBDC), according to an NHK report. It is believed that creating a legal framework will take some time. The Finance Ministry will take into consideration the panel's opinions while issuing a digital yen.
Central banks worldwide have been intensifying their CBDC efforts to enjoy the benefits of a modern, efficient, and fast financial system. Japan and other leading economies have stepped up efforts after China appears to have pulled ahead in CBDC development.
In the US, the Federal Reserve has begun exploration of a digital dollar, sometimes called the Fedcoin. To launch such an asset, the Fed says it would need the support of elected leaders. However, this may be challenging to receive.
At the end of March, US Senator Ted Cruz introduced a bill prohibiting the Federal Reserve from developing a "direct-to-consumer" central bank digital currency (CBDC). In his proposal, Cruz claimed that the digital dollar would be exploited for surveillance to collect users’ personal information and track their transactions.
