Since Facebook unveiled its Libra stablecoin in June, there’s been an acceleration in the discussion of
Central Bank Digital Currencies (CBDC). Japan has been exploring the topic for years. In November 2018, the Bank of Japan (BoJ) created the Legal Issues Study Group on CBDC and published its
report today.
The publication starts by outlining the possible forms such a digital currency might take. The Account-type CBDC is similar to the deposits that individuals and firms have in private banks, and the Token-type CBDC is more like a digital form of banknote. From a legal perspective, accounts have extensive existing legislation. Furthermore, there are options on how both of the currency-types might be issued.
It could be distributed directly by the Bank of Japan in which case the private information accumulated by the central bank will be protected under the Personal Information Protection Law. Alternatively, a currency could be distributed through intermediaries such as banks or payment companies. Middlemen are proposed to reduce the administrative burden on the Bank and will also help to avoid the accumulation of detailed personal information.
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