As analysts have recently been glued to the progress of China’s coming digital yuan, central bank digital currency activity has been heating up in other notable Asian hubs, too.
This week, the big CBDC headlines of note arose out of Japan and Cambodia, the former of which is responsible for some $5 trillion USD worth of gross domestic product annually.
A top official at the Asian superpower’s central bank has signaled an increased willingness to embrace a digital yen, while Cambodia is pushing ahead on the launch of its own blockchain-powered tender.
Japanese Banker: Let’s “Be Prepared” on CBDC
On January 30th, Masayoshi Amamiya, the current deputy governor of the Bank of Japan, said in new public comments that his country’s leadership needed to increasingly consider the possibility of releasing a digital yen in the years ahead.
“The speed of technical innovation is very fast. Depending on how things unfold in the world of settlement systems, public demand for CBDCs could soar in Japan … We must be prepared to respond if that happens.”
In those same remarks, Amamiya noted that while the Bank of Japan didn’t presently have concrete intentions to release a digital currency, the institution will continue to explore and research the implications that such a development could bring about.
Interestingly, the open-minded attitude from Amamiya marks something of a turn around, as last summer the official had warned that CBDCs “could erode commercial banks’ credit channels and have a negative impact on the economy.”
Amamiya’s latest musing comes after news broke last week that Japanese lawmakers in the country’s ruling Liberal Democratic Party were developing a proposal that would approve the creation of a digital yen as a result of collaboration between the private and public sector.
Days prior to that, the Bank of Japan announced it had joined forces with the Bank of England, the Bank of Canada, the European Central Bank, the Swiss National Bank, and Sveriges Riksbank to collectively research the subject of CBDCs.
Cambodia Finalizing Its “Bakong” Effort
Chea Serey, the Director General at the National Bank of Cambodia (NBC), told domestic press on January 27th that the institution was finishing up development of its own digital currency, known for now as Project Bakong, and that a roll-out could be expected in just a matter of months.
As the Director General explained it:
“Bakong will play a central role in bringing all players in the payment space in Cambodia under the same platform, making it easy for end-users to pay each other regardless of the institutions they bank with … Eventually, we hope to allow cross border payment through the Bakong system too.”
At present, just shy of a dozen domestic banks have already signed up to participate in the payments system, which was first initiated last summer. Shin Chang Moo, who serves as president at one of those banks, the Phnom Penh Commercial Bank, said other global powers are studying the Bakong effort.
“The international financial society is getting to know about Bakong and many other central banks around the world are likely to follow suit,” Moo said.
Shifting CBDC Tides?
The growing CBDC chatter in Asia comes after the Bank of International Settlements (BIS), the central bank of the world’s central banks, published a report that noted central bank institutions around the world were already “undertaking extensive work on central bank digital currencies.”
The grand question, then, is whether this is a matter of the first dominos falling in a macro level phenomenon, or whether CBDCs will eventually only get serious use in a handful of smaller nations. Only time will tell for now.