Over 30 firms across different sectors such as finance, telecommunications, retail and utilities in Japan said it will develop and test a common private digital currency that will function alongside traditional currency, yen.
In an article published by Reuters on Thursday, the trials would be carried out in 2021, and the digital yen would be first issued by private banks, before considering other entities.
The purpose of the idea is to encourage the cash-loving citizens of Japan whose cashless payments only make 20% to embrace digital currency like countries like the United States and China with 45% and 70% cashless payments respectively.
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Hiromi Yamaoka, a former Bank of Japan executive, who heads the group said authorities are interested in increasing productivity through cashless transactions.
He said that although there are existing digital payment systems in Japan already, they are incompatible, and do not have the capacity to beat cash payment, making it difficult for adoption.
“Japan has many digital platforms, none of which are big enough to beat cash payments,” Yamaoka said.
The Bank of Japan recently announced plans to start experimenting with a central bank digital currency, which will involve issuing a digital yen to test how it will perform as a payment instrument.