Central bank digital currencies (MNBC) are often predicted as the future of fiat currencies… But will they be adapted to the needs of users? Not necessarily, according to Japan, which is stopping its MNBC project. What happened ?
Japan’s digital currency on hold due to lack of public interest
The news first made it into the preview late last month, but it’s particularly symbolic. Japan stops its central bank digital currency (MNBC) project. As a reminder, the possible crypto-yen had been in the experimental phase since the beginning of 2021, with a second phase which had started in April. Nothing surprising: the vast majority of countries in the world are at this stage in the process of testing solutions of this type.
But the land of the rising sun is the first to officially turn away from it, after these test phases. The Central Bank considers that it is not necessary for Japan to offer an MNBC. Why ? Quite simply because the existing solutions seem sufficient to him, the Japanese being particularly familiar with digital means of payment.
👉 Going Further – Digital Central Bank Currencies (MNBC) – What are they and how do they work?
Japan is digital payment services
The Bank of Japan indeed argues that the benefits of a central bank digital currency are redundant. The Japaneses all already have access to banking servicess, financial inclusion not being a particular issue for the country. In addition, residents already use a lot of digital payment solutions from the private sector. They use it daily to buy goods and services.
Where then would fit an MNBC, which is supposed to be “only” a digital transcription of the yen, which would operate outside of banks? Moreover, the Japanese, like the French, are particularly accustomed to species. 20% of the country’s GDP would thus come from cash exchanges.
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A problem that goes beyond Japan?
The Bank of Japan has clarified that it will continue to experiment around digital payments, but this digital currency project is well and truly buried for now. It is a problem that echoes in any case to broader questions within the crypto ecosystem.
Cryptocurrencies are often criticized for solving problems that do not exist. Practice has shown, however, that in countries where inflation reigns, and where fiduciary money and the central bank face a lack of confidence, cryptocurrencies are particularly used. This is of course the case in Latin America, which has become a cradle of global adoption.
A country with a solid economy such as Japan, with a largely banked population and which has access to a multitude of payment applications, therefore does not play in the same court. It is likely that these questions will then be followed up in other “big” economies, because as always, it is the uses and the market that make their law.
👉 On the same subject – The Governor of the Banque de France shares his vision of a European MNBC
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Source: Asia Times
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