The government and Bank of Japan are seriously considering adopting a central bank digital currency (CBDC) to replace the current yen. 

According to a report on Tuesday by Japan’s largest financial newspaper Nikkei, the government intends to include a CBDC plan in its policy framework this year. The report notes the inclusion of the plan in Japan’s policy framework will make it an official government policy. 

According to the report, the Bank of Japan intends to respond to the need for domestic electronic payments by potentially coordinating a CBDC with other countries, such as the U.S. and European nations. The report also highlights the innovation and economic lead China has generated as it prepares to issue the “digital yuan.”

News of the Japanese government seriously considering a digital currency comes just one week after the Bank of Japan issued an official statement intending to experiment with the technical aspects of a CBDC. The BOJ also announced a partnership with five other major central banks in January, including the Bank of England and European Central Bank, in order to explore the feasibility of digital currencies. 

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