DIGITAL YEN: IMPLEMENTATION PROSPECTS

Abstract

The last decade has seen a dramatic increase in the role of digital currencies in finance, not only as a measure of value for goods and services, but also as investment, storage and accumulation. Digital currencies are an important part of the digitalization of the economy. Digital currencies offer new opportunities, such as speeding up the transfer of money and assets.

Central banks' digital currencies are the most reliable because they are backed by the government and embedded in monetary policy.

More than 100 countries are currently exploring the possibility of introducing digital currencies for their central banks (Central Bank Digital Currency, CBDC). The coronavirus pandemic has only accelerated developments in this direction.

This article focuses on the prospects of introducing the Bank of Japan's digital currency, the digital yen. The relevance of the study stems from the fact that in the context of financial globalization, it is necessary to consider foreign experience in the implementation of digital currencies by central banks.

A definition of a central bank's digital currency is given. The article reflects the current trends in retail payments and cashless turnover in Japan. The study showed that the pace of transition from cash to cashless payments in Japan is moderate. The reasons for the moderate transition to cashless payments lie in both demand and supply of cash payments.

It is concluded that one of the advantages of the central bank's digital currency project is the elimination of the concentration of non-cash payment instruments and the unification of all payment instruments.

Particular attention is paid to the possibility of introduction of the digital yen by the Bank of Japan, which in April 2021 began the first phase of testing its own digital currency. As part of this phase, the Bank of Japan will test the basic functions of CBDC as a payment instrument.

A total of three phases of testing the national digital currency are planned. The second phase aims to study CBDC in more detail, and during the third phase, private enterprises and ordinary users will have access to the digital currency.

It is concluded that the purpose of the digital yen will be to improve the transaction system and coexistence with cash and other forms of electronic payments. At the same time, the use of cryptocurrency would give a powerful impetus to the development of all spheres of the national economy.