It is the wish of every industrialized nation to enhance the capabilities of their financial system to increase the growth and development of all activities carried out in their countries.
With the threat from cryptocurrencies, as the masses now invest a huge amount of money into various digital currency platforms, it will be wise for central and commercial banks to remedy the financial sector by joining or creating digital currency in this digitalized world, rather than conflicting with other digital currencies.
Central banks of some countries are now looking at adopting digital currencies to modernize their financial system, which is a great step toward boosting the system.
Japan is known to be one of the most digitized and technological countries in the world. And as a country that looks forward to promoting prosperity, growth, and productivity, it always sets out to create policies and make decisions that will benefit the nation.
The financial sector is one of the major sectors of any nation, and the capabilities or efficiency depends on the kind of policies and structures adopted by the governing body.
Japan has joined other central banks of the world that seek to embrace changes in their financial system as it announces the kick-off to experiment with digital currency – not just any digital currency, but its digital currency.
In a statement released by the Bank of Japan (BOJ), it is set to resume its first phase of the experiment by March 2022. This phase will focus promptly on testing the technical reaction of issuing, distributing, and redeeming central bank digital currency, which can be abbreviated as (CBDC).
China has already taken the lead, and the Bank of Japan has taken action to meet the progressive trend of creating its digital currency with the hope of speeding up domestic and international payments of digital currencies rather than hindering it.
In the first phase of experiments, the bank plans to introduce its digital currency and move on to the second phase to introduce more functions, depending on the results of the first phase.
They plan on checking the progress, which will then determine if the second phase will look at setting limits on the amount of central bank digital currency that can be gotten by investors or those transacting.
According to the Executive Director of the Bank of Japan, Shinichi Uchida, initiating the experiments is necessary to create awareness and for people to key into the system.
He went ahead to say that the Bank of Japan might even forge ahead to launch a program that will entail payment service providers and end-users.
This is a new era for the financial systems of the different countries because it is without a doubt that many other countries of the world will follow the footsteps of the lead countries in creating central bank digital currency, once great prosperity is perceived.
