According to the Reuters report, the move came in tandem with an announcement by a group of seven major central banks, including the Bank of Japan, on what they see as core features of a central bank digital currency (CBDC) such as resilience and a clear legal framework.
The BIS digital currency analysis cluster was proclaimed in Gregorian calendar month 2020, and enclosed central banks from Japan, Canada, the UK, Sweden, Swiss Confederation, and also the European financial organization.
The BOJ's recent efforts to catch up include creating a new team focusing on issuing digital currency and conducting joint research with other central banks.
Do no harm: A central bank's issuance of a CBDC should not interfere with or impede its ability to carry out its mandate for monetary and financial stability. This group of central banks has built a strong worldwide consensus that will shed light on how we each investigate the case and draft for CBDC in our jurisdiction, he said.
Despite the decrease in demand for fiat, the participating banks noted that they would continue issuing banknotes to consumers as long as there is a need for it. 'Regardless of the situation, it might be determined appropriate to issue a CBDC to improve Japan's payment and settlement systems.
As per the report, if the country's banks have to issue CBDC to the general usage, various barriers are needed to be eliminated. The government, which does not want to remain behind the digitalization race in the region, stated that concrete steps will be taken in the field of digital central bank money in 2021.
The report also outlines CBDC design and technology considerations, including a discussion on where some of the trade-offs lie.
The group of central banks will also explore practical issues and challenges for broad interoperability of domestic CBDCs in accord with related global workstreams, such as the G20 roadmap on cross-border payments.
"A CBDC system would require a rulebook formalising the roles and responsibilities of the operator (s), participants and potentially other service providers and stakeholders", the report says.
The full report is available here.