Japan's largest banks are discussing the development of a digital payment system

Japan's largest banks discuss the development of a digital payment system - 1522065507 shutterstock 454100440 678x381 1Three of the largest Japanese banks are among the main players joining a study group that is looking to develop a digital payment system that can address cryptocurrency concerns.

The three most famous banks in Japan working on a single target

Mitsubishi UFJ Financial Group (MUFG), Mizuho Financial Group and Sumitomo Mitsui Financial Group - three institutions that control over $ 6,6 trillion of assets in total - will participate in a study group to determine the feasibility of a national digital payments solution .

The Japanese cryptocurrency exchange DeCurret, which hosts the study group, said this week in a statement that members "will examine and discuss challenges and solutions regarding digital currencies and the digital settlement infrastructure, to find consensus on their realization ".

Also other sectors involved

In addition to major banks, the group will include major players from a wide range of sectors. The telecommunications giant KDDI Corporation, for example; as well as the East Japan Railway Company, the country's largest railway operator; and Mori Hamada & Matsumoto, one of the "Big Four" of the country's law firms.

From a regulatory perspective, both the Bank of Japan (BoJ) and the Financial Services Agency (FSA) will participate as observers, together with representatives from government departments, including finance and the Ministry of Economy and Home Affairs.

40% of contactless transactions by 2025 in Japan

Topics to address include the implementation of a proposed digital payment system and potential use cases, both in Japan and overseas. The provision of services and aspects relating to the definition of infrastructure standards will also be examined.

Reuters, who reported the story, argued that a digital payment system shared between banks, large corporations and regulators could harmonize and refocus on existing attempts to encourage Japan to abandon physical money. While 96% of transactions in neighboring South Korea are electronic, Japan aims for 40% of cashless transactions by 2025.

Action to reduce worries about cryptocurrencies

While digital payments can improve efficiency and convenience, reads a statement, "concerns emerge on issues such as privacy protection, crime prevention measures and technological risks." Concerns about cryptocurrency security may not be entirely surprising.

Japan has experienced two of the worst hacks at an exchange ever: Mt.Gox and Coincheck. Exchanges now need an FSA license before they can legally operate in the country, as it does Bitcoin system.

DeCurret, which has been authorized since 2019, said the study group will provide "the need for direction for making valuable digital currencies in Japan." The group will hold its first meeting in June and will meet once or twice a month until September. He will then issue a report summarizing the discussions.