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The first 8-episode series of Waseda University’s English podcast “Rigorous Research, Real Impact” is currently streaming for free on Spotify, Amazon Music, Apple Podcasts, and YouTube.

In this column we will introduce an excerpt from episode 5 “Central Bank Digital Currencies from a Japanese Legal Perspective” which features Professor Takashi Kubota (Waseda Law School). Here he clarifies what central bank digital currency (CBDC) is and examines the reasons why it remains relatively unknown in Japan, with suggestions for what can be done to increase awareness.

You can read the full transcript by clicking the above episode banner.

Question:  Central bank digital currency or CBDC seems to be a new form of digital money. Could you explain what it is and how it differs from other kinds of currency?

Professor Kubota:

Thank you very much for the question. And central bank digital currency (CBDC) is, as you said, the digital form of a fiat currency or legal tender such as US dollar or JPY, denominated banknotes and coins.

General currencies include three types. One is crypto assets such as Bitcoin, which is issued by the private sector and not linked to legal tender, generally. And the second one is stablecoin such as Tether, issued by the private sector also, and their prices stabilize by linking them to legal tender or crypto assets or algorithms.

And the third one is the CBDC, such as the Chinese digital renminbi, issued by the central bank, which is the digitalization of legal tenders.

Question:  You’ve recently published a book in Japanese. The title in English translated is Legal Perspectives on Money and CBDC. And in this book, you emphasize the need for both legal adaptation and public involvement in the digitization of money. However, only about 15% of the Japanese population are even aware of CBDCs. And of that 15%, just 4.7% in the polling data understand the specifics. Why do you think people’s awareness of this is so low and what steps can be taken to address this lack of public awareness?

Professor Kubota:  

So, there are four reasons for the low CBDC awareness.

First, the slow penetration of digital payments compared to other countries. Second, the limited public relations and consumer education. Third, a lack of media coverage, and fourth, [it’s a] complex concept.

According to Article 26 of the Constitution, Japanese citizens have the right to education. Financial education has already been offered in junior high and high schools, but digital currencies are rarely taught, as the BOJ (Bank of Japan) has played a central role in financial education. The BOJ should properly educate the public about crypto assets and CBDC.

Japan can increase CBDC awareness by first, a public awareness campaign using media about what CBDC is with schools and communities; second, consumer pilots and simulations to give them first-hand experience with CBDC; third, financial literacy program about using CBDC; and fourth, public consultations to incorporate consumer opinions on CBDC.

About the Guest:

Professor Takashi Kubota

Professor Kubota has been teaching at the Waseda Law School since 2004. Prior to that, he worked for eight years at the Bank of Japan and taught as an associate professor at Nagoya University. Professor Kubota has served as an advisor to the government of Japan through his positions on a number of committees, including the Strategic Committee on International Promotion of Japanese Law and the Japanese Law Translation Committee. 

Professor Kubota was educated at the University of Tokyo (LL.B. in 1990, LL.M. in 1993), Harvard Law School (LL.M. in 1996) and Osaka National University, where he received a Ph. D. in International Public Policy in 2003. His research interests include international finance, international business law, cyber law, and negotiation.