Japan’s largest bank – Bank of Tokyo-Mitsubishi UFJ (MUFJ) – has announced that it is working to create its own virtual currency similar to Bitcoin in an effort to reduce expenses and establish a robust backend accounting and settlement system.
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According to unnamed bank officials, the virtual currency will be called “MUFG coin” after the Mitsubishi UFJ Financial Group, Asahi reports. The bank has been working on the coin since last fall and is finalizing its smartphone pilot app, which is almost ready for a public release.
The Tokyo-based bank is studying to see whether MUFG coin will cut transaction costs for international wire transfers and remittances, and reduce the need to maintain large-scale financial data centers. Though the coin is expected to be used for backend operations and settlement between banks, there is a possibility of issuing the coin to the bank’s customers in the future.
By tapping into Bitcoin’s underlying technology called the blockchain, the MUFJ is just one of the latest major global banks looking to establish a tamper-resistant accounting ledger. The main difference with Bitcoin, however, is that MUFG coin will be “permissioned” or only available for use to the bank and its customers like a company Intranet. On the other hand, Bitcoin is a public or “permission-less” cryptocurrency that’s available for all to use, like the Internet.
The news comes as the Bank of Japan (BoJ) recently stunned the world introducing negative interest rates to stem deflation. On one hand, this move could have dire consequences as Japan moves toward a cashless society. On the other, if MUFG coin proves to be a success, it could help pave the way for the world’s first state-sponsored virtual currency and also boost Bitcoin’s legitimacy in public eyes as a result. Given the island’s current economic woes, its penchant for technology and the current push towards cryptocurrency regulation in response to the Mt. Gox debacle, Japan is in a prime position to learn from its mistakes and become one of the first countries in the world to embrace digital currency.
MUFJ was ranked as the largest bank in Japan and the eighth largest in the world by Bloomberg in 2010 with $2.65 trillion in assets. The bank’s head office is in Marunouchi, Chiyoda, Tokyo, and employs over 35,000 people worldwide.
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Images courtesy of todayszaman.com, japantimes.co.jp