Summary of the 9th Meeting of the Central Bank Digital Currency Liaison Council
The Bank of Japan has published the minutes from the 9th meeting of the Central Bank Digital Currency (CBDC) Liaison Council on June 4, 2025. The meeting covered discussions about:
- Progress updates from the Bank of Japan on CBDC pilot experiments and international developments
- Key concerns from various financial industry associations about:
- Standardization and interoperability issues
- Cost burden and system implementation challenges
- The role of CBDC relative to existing payment methods
- Privacy protection vs. data utilization
- Cross-border payment implications
- Ministry of Finance presentation on the Second Interim Summary of the Inter-Ministry CBDC liaison meeting
1. Explanations from the Bank of Japan
Following opening remarks from Executive Director Kamiyama, the Bank of Japan secretariat explained the progress of pilot experiments and overseas developments regarding CBDC based on materials. The main comments were as follows:
Electronic Payment Service Provider Association
We would first like to express our respect for the steady progress being made by both the government and the Bank of Japan in examining the wide range of issues involved. That said, we would like to make a few questions and two comments.
As discussions progress within each Working Group (WG), it seems that some themes are reaching consensus while others still require deeper exploration. We believe that ingenuity in the future approach is necessary. Could you please share your current thoughts on summarizing the WG discussions to date and future CBDC Forum operations?
For example, in the case of update APIs in banking systems, two-factor authentication approaches and risk-based authentication handling differ among financial institutions, causing problems of reduced convenience and interoperability. As noted on page 9 of the secretariat materials, we would like to emphasize that standardizing update API interface specifications as needed would contribute to improving the convenience and interoperability of private payment services.
Regarding stablecoins, the situation has changed significantly, with the dollar-denominated stablecoin market expanding greatly since last year. In this changing external environment, cash management for multinational corporations will likely become a major business opportunity. Previously, companies would set up credit lines and contract options for foreign exchange risk hedging in preparation for insufficient working capital, but the emergence of stablecoins has increased the possibility of small-amount international remittances, enabling risk reduction through frequent small-amount transactions. As such frequent small-amount payments are expected to expand, examining CBDC, which can play an alternative and complementary role, will become increasingly interesting.
Secretariat Response
We believe it is necessary to summarize and organize discussions as the WG deliberations progress. We expect that by discussing cross-cutting themes beyond the WG framework and organizing discussions by theme, the overall flow will become visible. We consider the work of organizing WG discussions to date and returning them to society to be very valuable, so we would like to proceed in good consultation with participants. We will also continue efforts to provide feedback to participants on the results of constructing and verifying the experimental system, which is another pillar of the pilot experiment.
Regarding standardization, as the ECB is considering developing a rulebook for digital euro development, CBDC has aspects that make it easier to build systems and design institutions with commonality and standardization in mind, since some parts are designed and constructed from scratch. We believe it is important to proceed with awareness of such points.
Regarding the second comment, we understand this as a major issue about how CBDC should be positioned within the overall payment system, amid changes being forced upon existing payment practices and mechanisms, including cross-border currency exchange. For example, discussions in WG4 also have aspects of discussing the future of payments utilizing new technologies, so we would like you to continue presenting various insights and problem awareness within the forum.
International Bankers Association
In the WG2 discussion on page 14 of the secretariat materials, there is a description of "separating additional services from CBDC as a basic payment method," which we recognize as a very important point. As a form of vertical division of labor, it should be designed so that users can choose whether to use only CBDC with basic functions or to also use additional services constructed separately from CBDC. The basic functions of CBDC should be limited to the necessary minimum, and the additional service area should be designed so that users who need such services can use them after paying compensation.
Secretariat Response
Regarding the additional service area, we believe it is better to leave it to the creativity of private businesses rather than the public sector, even more so than the area concerning the basic functions of CBDC that are expected to be widely used by the public. While there is no clear line drawn at this point, we are proceeding with WG discussions while being aware of such points.
Japanese Bankers Association
We would like to express our respect for the efforts of all parties involved in the construction and verification of the experimental system and the progress of discussions through the forum. If social implementation were to be carried out, there would be a wide range of issues requiring consideration, such as organizing points for discussion. For example, to realize an environment where "anyone" can use it "anywhere," as discussed in WG5, it would be necessary to consider realistic system design that all financial institutions can introduce, and we would like to request discussion and consideration while taking such points into account.
As pointed out earlier, regarding discussions in each WG, some may be reaching consensus when viewed by individual WG. As mentioned in the secretariat explanation, it would be desirable to make forum operations more effective by considering the need for establishing cross-WG discussion frameworks and summarizing discussions.
From the perspective of overall payment system discussion, our related organization, the Japanese Banks' Payment Clearing Network (Zengin-Net), has established a "Study Group on the Future Vision of Fund Settlement Systems" under the "Task Force on Next-Generation Fund Settlement" as a venue for multifaceted and multi-angular examination of the future vision of fund settlement systems, including stablecoins and tokenized deposits. This study group is also conscious of cross-border transactions and would like to proceed with discussions and considerations while being aware of not being left behind by global trends.
We believe that the question of how to consider CBDC will arise in the broad discussion including cross-border transactions, and we would like to work together with the government and the Bank of Japan while exchanging information.
Secretariat Response
The work on retail CBDC explained today concerns elements that could constitute part of the payment system. The Payment and Settlement Systems Department, which serves as the secretariat, is promoting discussions and considerations on upgrading existing private payment systems in addition to retail CBDC, as well as participating in Project Agorá, an experimental project by the Bank for International Settlements (BIS). In such multifaceted and multilayered discussions and considerations, we would like to conduct broad discussions about the current state and future vision of payment systems while collaborating with domestic and international stakeholders.
Regional Banks Association
As WG discussions and considerations progress, there will likely be changes in participating members, so it will be necessary to devise ways to summarize points at regular intervals while allowing discussions to continue. Also, as pointed out by the Japanese Bankers Association, to enable all financial institutions to fulfill their role as intermediaries, we would like you to deepen consideration of system specifications that can be introduced without difficulty regardless of business type or size.
Secretariat Response
We believe that high-level universal access can be achieved by having a wide range of entities that have contact points with the public, including financial institutions, serve as intermediaries. Cost burden is an important issue, and we would like to consider it along with institutional considerations in the future.
Fintech Association
Regarding the pilot experiment, we felt it was difficult to get a hands-on feel, but with the progress of initiatives in the API sandbox project and demonstrations at FIN/SUM in March, opportunities to actually see it have emerged, making it possible to feel it concretely and familiarly.
We also have the impression that government-side discussions have been considerably organized, and we would like you to continue examining from broader points and perspectives. Our association would also like to explain the current state of pilot experiments to association members when opportunities arise.
As pointed out earlier, stablecoins are rapidly spreading, and there is also a trend toward tokenization of deposits. Additionally, while tokenization of real assets has previously focused on real estate and securities, tokenization of government bonds may be discussed in the future. We would like you to continue examining CBDC, which could be called tokenization of central bank liabilities, from broad perspectives and viewpoints, taking into account such movements in the private sector.
Secretariat Response
We also believe it is necessary to proceed with CBDC examination while properly grasping movements in the world. We would like to continue thinking about what role the central bank can play in a changing external environment and what matters should be examined as retail CBDC.
Regarding programmability, smart contracts, and tokenization of deposits, we have been paying attention to these for some time and have published research content in Bank of Japan Review and other publications. Since CBDC does not stand alone but exists within existing payment methods and mechanisms, we naturally believe it is important to proceed with consideration while being well aware of changes and trends in payment areas other than CBDC. The forum exists as a mediating and catalytic function for this purpose, and we would like to continue active discussions.
2. Explanations from the Ministry of Finance
The Ministry of Finance Financial Bureau explained the Second Interim Summary of the Inter-Ministry and Bank of Japan Liaison Meeting on CBDC. The main comments were as follows:
Financial Information System Center
In the Second Interim Summary, there is a statement that "it is essential that the expected benefits such as improved convenience exceed the expected necessary social costs," which is a very important premise.
This time, there were explanations that broad discussions are being conducted in the Bank of Japan's pilot experiment about the future state of the overall payment system and expectations for businesses utilizing payment systems, and that broad discussions including data utilization in CBDC are being conducted in the Inter-Ministry and Bank of Japan Liaison Meeting.
Regarding CBDC, expectations tend to be excessively high because it is public infrastructure, but the Bank of Japan and intermediary institutions cannot realize all expectations as system requirements. With wide-ranging issues, it is necessary to be careful about balanced discussions. Also, when considering implementation, examination from the perspectives of system configuration, operation, maintenance, and resilience will be necessary.
In the secretariat explanation, there was mention of pilot experiments in India. In pilot experiments involving general users, what kind of functions are being provided in other countries?
Secretariat Response
Regarding the comment about the need for examination from the perspectives of system configuration, operation, maintenance, and resilience when considering social implementation, this is exactly as you point out, and we recognize it as a very difficult issue. We recently published a progress report on the pilot experiment, and we would like to continue broad discussions while carefully returning the discussion and verification content of the pilot experiment to the world.
Regarding pilot experiments in India, we understand that they are conducting experiments targeting basic transactions such as store use and person-to-person remittances, and are also expanding to include programmability and offline payments. They also seem to want to explore the possibility of cross-border transactions in the future. Regarding China, pilot experiments are also being conducted in Hong Kong outside the mainland.
Second Association of Regional Banks
We understand that at some point, consideration will be given to whether to introduce CBDC as discussions and verification accumulate in pilot experiments and institutional design becomes more concrete. At that time, as stated in the interim summary of the Inter-Ministry and Bank of Japan Liaison Meeting published last year, we would like you to clarify the overall picture of costs required for CBDC system development and operation and the approach to cost burden. Also, as we have stated previously, while private financial institutions will likely be required to respond appropriately to system development and operation, we would like you to continue considering cost reduction through public burden, taking into account CBDC's position as legal tender.
Ministry of Finance Response
Regarding the approach to cost burden, we recognize its importance. While nothing has been decided at this point, CBDC is public infrastructure or the foundation of economic activity, and we would like to continue discussing this.
International Bankers Association
We would like to make two comments. The first point is regarding "role sharing between CBDC and other payment methods," where there is a description of "providing sufficient consideration to the impact on business operators' businesses," which we recognize as a very important point. Currently, various cashless payment methods are proliferating, but retail businesses feel the burden of payment fees, and against this background, there are also movements to encourage payments in cash or their own issued cashless payments. In this current situation, it will be necessary to continue discussing and considering what role CBDC should have and under what positioning it should be introduced.
The second point is regarding "balancing privacy protection with data utilization/public policy requirements," but we received the impression that it has become more detailed compared to last year's interim summary. The materials mention "integrated data handling" and "centralized management database," but in a situation where Japan as a whole has not established frameworks for joint data utilization, this seems to be a very important point. We would like you to consider the approach to utilization based on the axes of "data integration level" and "joint utilization level" together with private businesses.
Ministry of Finance Response
Regarding the first point, we would like to continue considering what CBDC introduction could solve regarding the issues that current cashless payments face.
Regarding the second point, we believe this is a problem awareness about whether some utilization like big data is possible while considering user privacy, and we believe it is necessary to discuss the degree of integration and joint utilization, and for what use cases integrated and jointly utilized data can be utilized. Through such discussions, issues such as how to manage databases and which entities should handle operations may emerge.
Electronic Payment Service Provider Association
Many companies participating in our association have been able to provide services for reference APIs using data groups that individuals use for their own purposes without careful standardization. This could be considered as being able to manage with coarser granularity examination compared to update API standardization.
In the Digital Administrative and Financial Reform Council's Data Utilization System and System Examination Committee, examination is progressing on cases where individuals use data for themselves and cases where society utilizes anonymized and pseudonymized personal data for problem-solving. Within this, verification and examination of API linkage to cashless payment data such as credit cards and electronic money is progressing, which would be helpful for reference.
National Association of Regional Banks
Regarding the approach to cost burden, we would like you to carefully consider not only the introduction of CBDC systems but also their maintenance and operation, while listening to the opinions of stakeholders.
Regarding AML/CFT, we believe consideration should be given to what form of response is desirable while considering the perspective of universal access, but the reality is that there are situations where employees struggle with counter responses and other aspects in current circumstances. Taking such points into account, we would like you to proceed with consideration while keeping in mind institutional design that intermediary institutions can practically endure.
Japanese Bankers Association
As mentioned earlier by the Regional Banks Association and Second Association of Regional Banks, we would like to request careful consideration of the approach to cost burden for system construction and operation and practically operable AML/CFT measures.
Also, based on discussions about role sharing between CBDC and other payment methods mentioned in the Second Interim Summary, we feel that the perspective of how to position CBDC within the overall payment system is important, and we would like to continue discussing with a wide range of stakeholders, including discussions in the "Study Group on the Future Vision of Fund Settlement Systems" mentioned earlier.
Norbert Gehrke
