Japan plans to test plastic cards for its proposed CBDC by developing a CBDC infrastructure platform that will pave the way for the adoption of the digital Yen.
Japan Credit Bureau (JCB) announces the start of its Central bank digital currency (CBDC) infrastructure project. The infrastructure will fall under the title JCBDC as per the company’s announcement.
The project will prepare the payment platform for the adoption of a CBDC. The national CBDC continues to undergo a series of tests run by the Bank of Japan (BoJ).
The proposed CBDC project
Japan Credit Bureau represents a Japanese analog to international payment systems such as MasterCard and Visa. The new project plans to adjust the JCB’s existing credit card infrastructure. The adjustment will cater to CBDC payments. IDEMIA and Softspace will collaborate with JCB in the development phase. The France-based provider of facial recognition technology and the Malaysian counterpart join the infrastructure development team.
The platform will consist of three sections. These sections include a touch payment solution, the provision of plastic cards for CBDC and a working environment simulation. JCB aims to adjust the mobile payment tools and QR Codes. The adjustment will feature in the later stages of testing.
In October 2020, the Bank of Japan shared a three-phase trial outline of CBDC. The second phase aimed at testing the technical aspects of digital Yen issuance. The issuance program is expected to commence this year.
JCB plans to develop a payment solution by the end of 2022. The company will also commence demonstration experiments at actual stores. The demonstration experiments will feature by the end of March 2023.
According to the Governor of the Bank of Japan, the digital Yen will launch in 2026. The governor also insisted that the decision will not be made by the Central Bank alone.
Criticisms over the project
The certainty of the project launch and the possible scope of its implementation remains a mystery. Apparently, in January, the former head of the BoJ’s financial settlement department stood firm against the move. He advised against the digital Yen as a part of the country’s monetary policy.
Yamaoka’s most significant concern lies with the negative interest rates. He believes that the fiat currency will devalue once the digital Yen becomes a prominent payment option. The public therefore will bear the brunt of the depleting value of the fiat currency.
He further warned that the digital Yen posed a risk to financial stability. Yamaoka claimed that the digital Yen could result in dangerous outcomes for the economy.
Japan and crypto
Japan is one of the nations that are quite hostile to cryptocurrencies. The country still holds cash transactions and believes that cash remains the king in the retail sector.
The payment sector in the country focuses more on executing offline transactions. In July 2020, the central bank published a research report. The research report focused on developing an offline CBDC.
Meanwhile, Governor Haruhiko of the BoJ reiterated that an immediate launch seemed unlikely.
