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Former BOJ official warns against use of digital yen in financial sector

A former Bank of Japan (BOJ) official who reportedly led the investigation into digital currencies is now advising against its use. digital yen as part of the country’s monetary policy. Yamaoka’s main concern is negative interest rates and believes that once the digital yen becomes a prominent mass payment tool, the general public will bear the brunt of the declining value of the fiat currency. He further warned that the digital yen could pose a risk to financial stability and have disastrous consequences for the economy. Yamaha currently works in the private sector and chairs a forum of 74 companies, including some of the largest banks in the country. . The forum is currently working on launching a private digital currency as early as April of this year. Related: Japan will prioritize simplicity in CBDC design, says central bank executive In October 2020, the BOJ shared a three-phase pilot review for its central bank digital currency (CBDC). The first two phases of the trial are aimed at testing the proofs-of-concept, while the third phase would be a pilot. The first phase started in April 2021 and is expected to be completed in March this year. The BOJ is expected to start the second phase of trials later this year that would test the technicalities surrounding the digital yen issuance. Despite being one of the first countries to adopt crypto regulations, cash is still king in Japan’s retail sector due to natural disasters that frequently cut power to the country. For example, the payments industry in the country is more focused on performing offline transactions. In July 2020, the central bank published a research report aimed at developing an offline CBDC. BOJ Governor Haruhiko Kuroda said in a statement Friday that they are not looking for an immediate launch. He also noted that a digital yen could be launched by 2026 and the decision will not be made by the central bank alone.
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