In a speech today, Bank of Japan (BoJ) Governor Haruhiko Kuroda said the BoJ’s central bank digital currency (CBDC) experiments would start in the spring. The Governor re-iterated that as yet, no decision has been made to proceed with a digital yen. Last October, the Bank published a CBDC paper which outlined plans for two Proofs of Concept.
Kuroda stated it would be too late if the Bank of Japan waited to experiment only when there is a need for a CBDC.
“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,” said Kuroda.
He continued, “amid significant changes that are occurring with the advent of the digital society, we will take this opportunity to carefully consider the way in which we should provide central bank money.”
The Governor referred to the Bank for International Settlement’s (BIS) CBDC survey, which found that 60% of Banks surveyed were conducting Proofs of Concept.
In another part of his talk not directly related to CBDC, he explored how innovation is often a matter of new combinations of existing services. In the context of the unbundling of banking, he highlighted the potential to integrate banking and supply chain data to automatically match invoice receipts and payments.
Kuroda continued, “These developments could further enable a grasp of business conditions, cash flow management, the production of credit information, automated lending, and management consultation.”
Another area mentioned was the potential to glean data from personal bank account activity. “Information on the customer’s lifestyle obtained from these business data could help identify where there is a hidden potential demand for financial and non-financial services,” said Kuroda. However, privacy advocates might have strong opinions about that.
Meanwhile, Japan has been a first mover in an important area, exploring how a CBDC might work offline.