In the project led by 3 big banks in Japan, the association of 70 institutions announced their plans to start using new digital money in 2022.

At a press conference on Wednesday, Kazuhiro Tokita, CEO of Japanese cryptocurrency exchange DeCurret, gave information about the yen-backed digital currency.

According to the news of Reuters, it was stated that the digital currency will create a platform to be used jointly, where large-scale fund transfers between companies will take place faster and more securely. Currently, the currency is reportedly temporarily named “DCJPY,” while the digital currency will be backed by fiat deposits in the bank.

The DCJPY project is spearheaded by Japan's major banks. It is known that negotiations for a common payment infrastructure for digital payments in Japan have been going on since last year. The team, led by the country's leading banks such as Mitsubishi UFJ Financial Group Inc, Mizuho Financial Group Inc and Sumitomo Mitsui Financial Group, will complete the test work in the coming days. The Japanese yen-backed digital currency is expected to be launched in the second half of 2022 at the latest.

This initiative serves as a guide for a CBDC to be created by the Bank of Japan in the coming years. In this context, Japan Financial Services Agency and Bank of Japan observers are government institutions that closely follow the process.

Since DCJPY will be supported by bank deposits, individuals and institutions will be able to use this service after creating an account. While the lower transaction limit is thought to be 1 yen, it is thought that the number of users will be high due to the widespread use of cryptocurrencies in the country.

Establishing a wide payment network with institutions in different sectors is considered advantageous in terms of reducing payment costs and providing a fast transfer of funds. In addition, fixing the deposits to be kept in the bank also increases the confidence in the project.