The coronavirus inspires Japan to finally start “digital yen” trials as the East Asian superpowers are trying to fight the pandemic while focusing on blockchain and digital currencies at the same time. In the latest crypto news, we take a closer look at the pandemic report.
As ZDNet reported on Friday, Japan has silently started making digital yen experiments in an effort to build out CBDC capabilities. The move comes right when China’s digital yuan saw explosive development and South Korea assembled a team to create a digital won. The reports showed technical challenges for the state-wide deployment which are being carefully considered while the legal implications are the basis of research showing that Japan wants to have more knowledge before issuing a digital currency.
Leading the study is the Bank of Japan or the central bank of the country with an estimated $4.87 trillion under management. Last week, the bank issued a “technical hurdles for CBDC” report saying that the upcoming experiments with a state-backed currency will provide an alternative to the traditional yen. The Coronavirus inspires Japan to consider CBDC as the bank believes traditional payment methods such as cards or cash rely on contact that will increase the risks of virus transmissions. To prevent that, the contactless method is, for example, online, mobile, and digital currency payments which are expected to gain precedence.
Earlier this month the Japanese senator said that cryptocurrencies will be more important but don’t expect to see digital yens that go around soon. BOJ said that the projects remain in the first stage as they need groundwork for the long-term aspects to be carried out. Two specific research areas were identified as the main focus which is ease-of-access and resilience. This is important because Japan is one of the most earthquake-prone countries that cause disruption of several economic systems and if the power is out, there will be no outlet to access online payments, a feature that cash can provide the citizens.
Another concern is that Japan’s older population and doesn’t understand digital currencies and end up as victims of scams. They may not have access to mobile phones, impending a full-scale digital yen launch. Only about 60% of the Japanese population owns a smartphone which means fintech apps are not inclusive to all age groups yet. Japan’s economy is known for its heavy reliance on cash despite being a tech-advanced country. Japan’s banking systems run on outdated software thus creating an environment for digital currency disruption.
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