DCJPY: Future Yen Backed Cryptocurrency

A consortium of approximately 70 Japanese companies intends to launch a yen-based digital currency in 2022.

Japan is one of the hungriest countries in the world. Many transactions are still carried out using banknotes and coins. In order for the codes to be gradually changed, the Japanese government is trying to promote cashless transactions in order to increase productivity. Thus, the DCJPY (working title) cryptocurrency will be backed by bank deposits and will use a common platform to accelerate large-scale money transfers and settlements between businesses. It will officially enter the testing phase in the second half of 2022.

The consortium, which includes Mitsubishi UFJ Financial Group, Mizuho Financial Group and Sumitomo Mitsui Financial Group, has been meeting regularly since last year to explore ways to build a common settlement infrastructure for digital payments. Japan’s three mega-banks have each introduced their own digital payment system, but they are lagging behind efforts by tech companies like PayPay, backed by investor SoftBank Group Corporation, which is not part of the consortium.

DCJPY, stablecoin or CBDC?

White papers (launch press release) suggest that DCJPY should be issued by banks and treated as creating the same liability as deposits, as this arrangement is already well regulated and should be enforceable. digital currency. The Digital Currency Forum states that if digital currencies are pegged to deposits, their value will be more stable.

This experience is different from the work being done by the Bank of Japan to create a digital yen. CBDC is a topic that China and the US are also exploring. “A digital currency system built on a common platform backed by bank deposits would be in line with the CBDC that could be planned and implemented in Japan,” said Toshihide Endo, former director of the Japan Financial Services Agency and DeCurret Special Advisor.