In Japan, a country traditionally known for its heavy reliance on cash, officials at the Bank of Japan (BOJ) are increasing their focus on digital currencies as the nation rapidly moves towards cashless payments. Government data shows that cashless transactions surged to 42.8% in 2024, surpassing a key government target a year ahead of schedule.
This accelerated shift is compelling policymakers to prepare for a future where physical currency may be less prevalent. In response, the BOJ initiated a pilot program in 2023 to explore the development of a central bank digital currency (CBDC), or a “digital yen,” though a final decision on its issuance has not yet been made.
Top BOJ officials have stressed the importance of ensuring Japan’s payment systems remain convenient and resilient amidst rapid digitalization. Deputy Governor Shinichi Uchida warned that in a highly digital society, there’s no guarantee a sovereign nation’s currency will remain the dominant form of payment, especially if public trust in its value falters.
This push is part of a global trend among central banks, spurred by the rise of stablecoins and geopolitical developments. These include a hypothetical U.S. ban on a digital dollar and China’s significant progress in internationalizing its digital yuan, adding pressure on countries like Japan and those in the Eurozone to develop their own digital currency infrastructure.
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