Bank of Japan highlights necessity of creating digital yen
Japan surpasses cashless target as digital yen pilot gains momentum
Japan, long known for its deep-rooted reliance on physical money, is witnessing a major cultural and technological shift.
In 2024, cashless payments rose to 42.8%, surpassing the government’s 40% target a full year ahead of schedule, according to official data, reports Cryptopolitan.
This trend, driven by digital innovation and changing consumer habits, is pushing the Bank of Japan (BOJ) to reevaluate its approach to monetary infrastructure. While cash remains prevalent, BOJ officials now publicly acknowledge that digitalization could significantly reduce banknote use in the years ahead.
Digital yen pilot signals strategic positioning
The BOJ launched a central bank digital currency (CBDC) pilot in 2023, engaging with private firms and government agencies to develop a retail-focused digital yen. BOJ Executive Director Kazushige Kamiyama emphasized that the nation must act now to ensure its settlement systems remain efficient, universal, and resilient in a digitized economy.
The pilot program does not guarantee the issuance of a CBDC, but it reflects the BOJ’s efforts to future-proof Japan’s financial system, particularly as private cryptocurrencies and foreign payment providers gain influence.
Digital money gains urgency amid global currency rivalry
Deputy Governor Shinichi Uchida highlighted a deeper concern: the possibility of the yen losing status as Japan’s dominant payment instrument if faith in BOJ’s price stability mission falters. He warned that without proactive adaptation, crypto assets or foreign-backed stablecoins could displace the yen.
These comments come at a time when President Donald Trump’s executive order banned the issuance of a U.S. digital dollar, signaling a shift in U.S. policy toward privately issued stablecoins.
Recently we wrote that South Korea’s Democratic Party formally introduced the Digital Asset Basic Act, a sweeping legislative proposal aimed at creating a unified regulatory framework for cryptocurrencies, stablecoins, and digital asset service providers.
