As announced by a local financial official, Japan needs to adapt its laws to issue a central bank digital currency.
The head of the Liberal Democratic Party’s council on financial affairs and a former official at the Ministry of Finance, Kozo Yamamoto, believes that Japan must revise a law stipulating the Bank of Japan’s (BoJ) mandate responsibilities regarding the development of a CBDC.
As per announcement to an Oct. 12 Reuters report, Yamamoto said that potential amendments to the BoJ law would be an excellent opportunity to consider other changes like adding job creation to the central bank’s order. The official also stated that the revised BoJ law should include provisions for inflation rates:
“Like the U.S. Federal Reserve, the BOJ should set job production and inflation as its mandate […] The new law should also clarify that 2% inflation is the BOJ’s policy target.”
Yamamoto’s comments came shortly following the BoJ properly announced its plans to conduct a proof-of-concept for the digital yen in 2021. The disclosure came as part of Japan’s central bank’s first joint report into CBDC issued on Oct. 9. Before this announcement, the BoJ claimed that it had no plans to launch a CBDC shortly.
Japan is becoming more serious about its own CBDC amid China’s aggressive progress with the digital yuan. On Oct. 9, the vice-finance minister for Japan’s international affairs warned the global community of China’s potential risks taking the “first-mover advantage” in issuing a CBDC.