Recently, it was reported that Hideki Murai, head of Japan’s ruling party’s panel on digital currency, offered a lengthy time frame before there would be greater clarity on the digital yen. He said to expect more details by the end of 2022, noting that any decision would have a huge impact on financial institutions. Additionally, he suggested that, if a digital yen was developed, it would need to be compatible with CBDCs of other developed nations.
“Japan is in an interesting spot because they are currently experiencing a number of changes within their financial system, so I think that their intuition is telling them to tread lightly. On the other hand, neighboring China is forging ahead with the e-Yuan. The danger, if Japan is left behind, is that China’s digital currency could gain favor across the region,” noted Richard Gardner, CEO of Modulus, a US-based developer of ultra-high-performance trading and surveillance technology that powers global equities, derivatives, and digital asset exchanges.
“CBDC has the potential to completely reshape changes occurring in Japan’s financial industry… If a digital yuan becomes so convenient it’s frequently used by tourists or becomes a main settlement means for trade, the relationship between the yen and yuan could change” and erode the yen’s status as a safe-haven currency,” Murai said.
“I think it is important for countries to find a balance. On the one hand, you don’t want to go off and launch a CBDC before you’re ready, technologically or economically. On the other hand, you don’t want to be left behind, either. Eighteen months is a long time, and a long list of things can play out before then, not the least of which being the results of China’s own move towards digital assets,” Gardner said.
“This is a once in a generation kind of technological advancement. The technology is way ahead of the bureaucracy and the regulatory environment. But, if you’re a politician, you can’t let this get away from you. Ignoring the coming wave of CBDCs is the equivalent of passing on the Race to Space. This is a brand new frontier. Technologically, yes. But, it also could open up a brand new sector of the economy and completely change the face of fintech,” Gardner said.
Modulus is known throughout the financial technology segment as a leader in the development of ultra-high frequency trading systems and blockchain technologies. Over the past twenty years, the company has built technology for the world’s most notable exchanges, with a client list which includes NASA, NASDAQ, Goldman Sachs, Merrill Lynch, JP Morgan Chase, Bank of America, Barclays, Siemens, Shell, Yahoo!, Microsoft, Cornell University, and the University of Chicago.
“Government is built, by design, to move slowly. CBDCs, however, are an area where government needs to partner with the private sector. They need to embrace innovators and work with them to design a plan that keeps the public safe while ensuring that they aren’t left behind as blockchain technology related products and services continue to boom,” Gardner said.
