A consortium of more than 70 leading banks, financial services providers and other businesses in Japan is to conduct a series of proof of concept (PoC) trials of a digital currency supported by commercial banks across a range of specific use cases with the aim of rolling the currency out by the end of the 2022 fiscal year.
The Digital Currency Forum began researching the options for the issuance and settlement of digital currencies in Japan in November 2020 and has now published a progress report and white paper[1] with a “draft scenario” for a digital currency — currently known as DCJPY — and an interoperable two-tier digital currency infrastructure.
The forum is looking at “issuance and settlement methods for yen-denominated private-sector digital currencies” and says that it is also seeking to create an infrastructure that supports central bank digital currencies (CBDCs) and “cross-border instruments”.
Two-tier infrastructure
“It is assumed that the digital currency DCJPY will be issued by commercial banks as their liabilities, which are similar to bank deposits,” the white paper explains.
“The Digital Currency Forum also envisions that digital currency, DCJPY, will be able to connect organically with other digital platforms.
“In other words, the forum aims to realise a form of ‘digital payment as a service’, in which various economic activities and businesses can add payment and settlement functions as one of their wide-ranging services by incorporating the scheme of digital currency in accordance with their own business needs.”
“The activities of the Digital Currency Forum are not in conflict with the current discussions regarding stable coins and CBDCs. Rather they are complementary to each other,” the forum adds.
The two-tier infrastructure consists
