Cryptocurrencies May Shape Japan’s Payments Future, Says Bank of Japan
Japanese officials are now accepting what onc seemed unlikely: cryptocurrencies might play a big role in everyday payments, possibly even rivaling the yen. They caution that this won’t happen overnight. Yet, the possibility that digital assets could transform Japan’s payment system is now seen as increasingly feasible.
At a recent meeting, BOJ’s Executive Director Kamiyama noted that digitalization could lead to a significant drop in cash usage. Government data shows that cashless payments have surged to 42.8% of all transactions, tripling since 2010. The country reached its official 40% cashless target ahead of schedule.
The BOJ is still undecided about a digital yen rollout, but its pilot program launched in 2023 is now speeding up. While not endorsing crypto as a full replacement for the yen, their support for a digital yen suggests they view decentralized assets as a strong contender in payment systems.
BOJ Deputy Governor Uchida suggested that if the BOJ fails in maintaining price stability, people might lose trust in the yen.In a digital society, he noted, the traditional central bank-issued currency might not always remain the go-to payment tool. Cryptocurrencies and stablecoins could fill the gap.
Japan’s economy remains fragile, with slow growth and volatile inflation. Yet, digital payments, driven by apps and QR codes, are making significant gains. As of December 2024,over seven millionwere active in Japan,up from five million earlier that year.
Regulation in Japan has been strict, but lately, there’s been more flexibility, especially regarding stablecoins and their role in payment infrastructure.The BOJ’s CBDC pilot involves major banks and fintech firms, and while the digital yen isn’t live yet, it’s seen as crucial for maintaining
