China digital currency: e-yuan launch would be ‘hard to ignore’, ex-top Japanese financial regulator says

China began exploring the concept of a sovereign digital currency in 2014 following the success of e-commerce platforms Alibaba, Tencent and Baidu

China has already distributed some 200 million yuan (US$31 million) in digital currency as part of pilot projects across the country

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The People’s Bank of China is leading efforts to develop a digital currency after launching several trials, whereas the Bank of Japan only began its project in April. Photo: Xinhua

Published: 10:20am, 29 Jun 2021Updated: 10:20am, 29 Jun 2021

China’s progress toward issuing a central bank digital currency (CBDC) will have a huge impact on how quickly advanced economies follow suit, former top Japanese financial regulator Toshihide Endo told Reuters.

Central banks have accelerated efforts to develop digital currencies to modernise financial systems. The People’s Bank of China is leading after launching trials, whereas the Bank of Japan (BOJ) only began its project in April.

US officials on Monday voiced scepticism about CBDCs, yet Endo said such caution may change if the world’s second-largest economy introduces one.

If it launches a CBDC, China will be armed with huge social infrastructure

Toshihide Endo

“If it launches a CBDC, China will be armed with huge social infrastructure,” Endo, who was Financial Services Agency (FSA) commissioner until 2020, said on Monday.

“It would be a move hard to ignore for other nations. Japan and other advanced nations will face the tough question of how quickly they should follow,” said Endo, who retains close ties with FSA and BOJ officials.

As FSA commissioner, Endo oversaw a range of regulation including for banks and digital currencies.

He also worked with the BOJ in prodding regional banks to streamline to weather headwind such as the profit hit from prolonged ultra-low interest rates.