Multiple Japanese lawmakers have called for a Digital Japanese Yen (JPY), which would be a blockchain-based version of the JPY, out of the fear that their economy will be left behind when China launches the Digital Chinese Yuan (CNY).

Essentially, China has already completed the top-layer design and joint testing of the Digital CNY, and it is expected to launch at some point in the near future. The Digital CNY has the potential to make the Chinese economy more efficient and liquid, while simultaneously providing a way to control large flows of money in order to stabilize the economy during times of crisis.

In response, the former Japan Economy Minister Akira Amari said Japan needs to issue its own Central Bank Digital Currency (CBDC) to counter the Digital CNY. Further, the Head of Banking and Finance System Research at Japan’s Liberal Democratic Party, Kozo Yamomoto, indicated that Japan should launch a Digital JPY within 2-3 years, and the sooner the better, so that China does not further advance its digital hegemony by being the only major country with a CBDC.

Beyond this, the Deputy Governor of the Bank of Japan says Japan needs to be ready to issue a CBDC if public demand for it surges.

Thus, Japan is clearly moving towards eventually launching a Digital JPY, but there has been no official announcement yet regarding the beginning of technical development, nor an official time frame on when it would launch.