Officials Say Japan Must Amend Central Bank Laws To Issue Digital Yen

Officials say Japan must amend central bank laws to issue digital yen. 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 and responsibilities on the development of a CBDC.

Yamamoto said that potential amendments to the BoJ law would be a good opportunity to consider other changes, such as adding job creation to the mandate of the central bank, according to a Reuters report on Oct. 12. The official also added that the revised BoJ law should include provisions for inflation rates “Like the U.S. Federal Reserve, the BOJ should set job creation and inflation as its mandate […] The new law should also clarify that 2% inflation is the BOJ’s policy target.” 

Yamamoto ‘s comments come shortly after the BoJ formally revealed its intentions to conduct a digital yen proof-of – concept in 2021. The announcement came as part of the first joint report on CBDC released on Oct. 9 by Japan’s central bank. The BoJ reported, prior to this announcement, that it had no plans to launch a CBDC in the immediate future.

Japan is apparently getting 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 the potential risks of China taking the “first-mover advantage” in issuing a CBDC.

[image: Agathe Marty]

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