During a recent press conference, Bank of Japan (BOJ) Governor Haruhiko Kuroda said that Japan needs to prepare for a time that the country may need to issue a digital version of its currency yen.

He said, “From the viewpoint of ensuring the stability and efficiency of the overall payment and settlement systems, it’s important to prepare thoroughly to respond to changes in circumstances in an appropriate manner.”

Last year, it was reported that Japan could launch its CBDC to counter China, which has already started testing its CBDC. The head of the banking and finance systems research commission at Japan’s Liberal Democratic Party, Kozo Yamamoto said that the digital version of the yen could go online in the next two to three years.

The launch of the digital yuan could help China establish itself as a leader in the digital economy. With a population of around 1.3 billion and quick adoption of the digital yuan in emerging economies could make this a reality.

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In order to run the pilot programmes, the Chinese government has delegated the task to the top four biggest state-owned lenders in the country. The tests will be run by Bank of China, China Construction Bank, Industrial and Commercial Bank of China, and Agricultural Bank of China and if successful, the digital renminbi will become the world’s first sovereign digital currency.

Many argue that China have predicted the possibility of an universal currency in the future as we move towards a digital age and China wants to beat others in the race. While China is not the only country running tests on a CBDC, other countries such as Japan are researching extensively too in this regard; however, it is no doubt that China is leading the race. China definitely wants to counter the dollar and to plug the yuan as the global currency. If so is the case, the digital renminbi will definitely help the Asian superpower to establish itself as a leader in the global economy. Said that, a universal currency is still years away, and can China’s renminbi establish itself as a universal currency? Only time will tell.

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According to the ministry, these three regions are the Beijing-Tianjin-Hebei region, Yangtze River Delta, and the Greater Bay Area.

The digital currency pilot programmes will be launched in some major Chinese city such as Beijing, Tianjin, Hong Kong and Macau.

The Digital Currency/ Electronic Payments (DCEP) has already been trailed in Shenzhen, Chengdu, Suzhou, and the Xiongan economic zone near Beijing.

Earlier this year, China’s apex bank, the People’s Bank of China revealed that it will increase research and development when it comes to the digital version of its currency, yuan.

The topic was discussed during the 2020 national telecom conference organised by the central bank in the month of April.

“The People’s Bank of China will undoubtedly further its research and development of the national digital currency with enhanced top-down design,” the bank said in a notice.

Last year, China also rolled out new laws with regard to online encryption as a part of its plan to launch a digital version of yuan and take greater control of the digital economy.

In recent times, China has also approved major blockchain-based projects in the country to accelerate the launch of its central bank digital currency (CBDC).

The coronavirus pandemic has also accelerated the launch of China’s digital currency as physical cash was termed as a carrier source of the Covid-19 virus and the usage of cash was discouraged by the World Health Organisation (WHO).

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