The move follows the Bank of Japan’s recent announcement about its plan to experiment with issuing a digital yen. Japan has been working on the project for some time and the new development underscores a growing awareness of the need for Japan to catch up to rapid global advances in financial technology.

Hiromi Yamaoka, a former BOJ executive who chairs the group, said during an online briefing, “Japan has many digital platforms, none of which are big enough to beat cash payments. We don’t want to create another silo-type platform. What we want to do is to create a framework that can make various platforms mutually compatible.”

It is reported that cashless payments making up only 20 percent of total settlement which is well below when compared to other developed or developing countries such as the US or China. 

Recently, China has carried out pilot experiments when it comes to its own digital currency, the digital yuan. It 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. However, Japan wants to challenge China with the digital yen.

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