70 Japanese companies to test cryptocurrency

A consortium of about 70 Japanese companies will test the use of a cryptocurrency, Reuters announces on November 24, 2021. These companies want to launch a yen-indexed digital currency in the course of 2022. Provisionally called DCJPY, it should be tested in the next months to assess your ability to handle business-to-business transactions.

Evidence on business transactions

The three megabanks in the country are part of this consortium: Mitsubishi UFJ Financial Groug, Mizuho Financial Group and Sumitomo Mitsui Financial Group. Japan Post Bank, Nippon Telegraph and Telephone, Kansai Electric Power and East Japan Railway are also part of the project.

The big three banks have already deployed their own digital payment infrastructures, which are not interoperable. These financial giants appear to lag behind Japanese companies such as PayPay (SoftBank). Will this new DCJPY digital currency reorganize the cards?

The DCJPY will use blockchain distributed ledger technology and will be backed by bank deposits, the Nikkei details. It will use a common platform to accelerate large-scale remittances and business-to-business settlement. Once their account is opened, users will be able to start transacting in digital currency

The consortium has been meeting regularly since last year to explore ways to create a common settlement infrastructure for digital payments. Some companies will participate in experiments to evaluate the use of the currency in sectors ranging from energy to retail. Testing around this digital currency will focus on using a digital currency for low-cost business transactions, such as large business-to-business payments, Nikkei reports.

Japan, cash fan

This experience is different from the work the Bank of Japan is doing to create a digital yen. The latter announced in November 2020 that it wanted to test its own cryptocurrency or CBDC for the central bank’s digital currency. However, the Nikkei rages, the Bank of Japan does not have a concrete plan to issue this digital currency at the moment. The second phase of its testing will begin in April and will focus on conversions between digital currency and cash, as well as possible cooperation with private sector settlement mechanisms.

Japan has every interest in promoting this type of initiative, since it is one of the countries in the world that requires the most cash. As of November 2020, digital payments accounted for only 20% of transactions. A threshold well below that of the United States (45%) and neighboring China (70%). The government is trying to change these habits to make the country more attractive to consumers.

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