Kodai Sato, a senior researcher at Nomura Research Institute, contended that financial inclusion is not Japan's top priority during a recent webinar hosted by The Block. As such, The Bank of Japan (BoJ) has no plans to issue a central bank digital currency (CBDC) at present, Sato remarked during the July 16 event.
"At this point, Japan gives various takeaways, for example, financial inclusion isn't always a key issue in Japan as bank account penetration is already 100% or 99% so financial inclusion is not the top priority of Japan as it is for other countries," Sato said.
While shedding light upon some of the biggest challenges Japan faces, Sato said, it is important to address the questions behind the need for a digital currency and its role in Japan. This, in turn, would require the amendment of legislation.
"There is less theft in Japan compared to other countries, so people are happy to with paper cash and there is no issue carrying bills. Japan is a cash-dominated country, people love cash because it's very convenient."
However, Sato said the BoJ's research scope isn't limited to just the topic of CBDCs. BoJ has also been actively researching and examining potential benefits and risks on broader topics, including cross-border payments and privacy of transactions.
He shared key takeaways from Japan's point of view regarding digital currency. One of the main projects that BoJ is working on, Stellar, has four phases, he said. The four phases include distributed ledger technology (DLT) as a way to process large-value payments, investigate delivery versus payment using DLT, exploring the solutions for cross-border payments, and privacy issues. Of the four, Japan is especially focused on finding solutions to cross-border payments and privacy issues, according to Sato.
"We are actively researching DLT and CBDC topics. There are core issues we need to think about before we actually implement CBDC tech," he said.
Watch the full webinar here or below: