Senior Japanese official fears China being ‘first-mover’ in digital currency

China might gain control over global CBDC standards, a Japanese official warns.

Japanese banking officials continue to voice concern over China’s progress in the development of its central bank digital currency.

Kenji Okamura, vice-finance minister for Japan’s international affairs, warned the global community of the potential risks of China’s digital yuan, Reuters reported Oct. 9.

Okamura said that China’s digital yuan initiative is “moving at a relatively fast pace” as the Chinese government presumably aims to be the first global jurisdiction to adopt a CBDC.

“First-mover advantage is something we should be afraid of,” Okamura said at a digital seminar backed by the Official Monetary and Financial Institutions Forum, adding:

This advantage is setting the standards of scheme design because it’s the first mover (and) the technology platform which would facilitate further wide adoption of that digital currency.”

The news comes shortly after a Chinese magazine run by the country’s central bank claimed that China needs to become the first nation to issue a digital currency in mid-September 2020. In the article, the authors declared that the issuance and control of a digital currency would become a “new battlefield” of competition between sovereign countries.

Despite a number of countries actively researching and piloting CBDCs, China is apparently winning the CBDC race so far. On Oct. 5, China’s central bank officially announced the first results of the digital yuan pilots, claiming that the country has processed $162 million in CBDC transactions between April and August 2020.

As reported by Cointelegraph, some global jurisdictions like Sweden and the Bahamas have also launched tests for their own digital currencies. However, these initiatives are apparently lagging behind the digital yuan as no concrete results have been provided so far. Still, the Bahamas claim to be the first country in the world to roll out a state-backed virtual currency nationwide after launching the first tests in late 2019.

While it’s difficult to say who’s really winning the global CBDC race, Japan has no plans to launch a CBDC in the near future. In July 2020, the Bank of Japan officially announced the formation of a dedicated team to explore CBDC development, stating that the bank does not have plans to issue its own CBDC.

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