The Mitsubishi UFJ Financial Group’s (MUFG) Bank of Tokyo-Mitsubishi UFJ, Japan’s largest bank, has reportedly begun issuing MUFG coin, its own digital currency to its employees this month.
Japan’s biggest banking corporation is on its way to becoming the world’s first major financial institution to develop and deploy its own digital currency. Dubbed ‘MUFG coin’, the banking giant began development and trials of the cryptocurrency as early as 2015 before a public confirmation of the blockchain-based project last year. Initial reports revealed the development of the digital currency as an in-house token, to be used within MUFG’s companies.
While unconfirmed by the bank, the digital currency will reportedly rely on a P2P platform that will use a smartphone application to authenticate digital tokens during transactions on a blockchain.
“MUFG coin takes advantage of the new technology that is on a network of multiple smaller computers. It is possible to cheaply build a tamper-resistant transaction record of the ledger, otherwise referred to as the “blockchain”, a report read at the time.
More details emerged in mid-2016. The MUFG Coin was being primed for a wider retail issuance beyond an in-house currency. The value of a single MUFG coin is equivalent to one fiat Japanese yen, giving it parity with Japan’s currency. Users will be able to withdraw MUFG coins from their bank accounts via a smartphone app or the bank’s ATMs. Notably, the currency would also facilitate currency conversions between yen and foreign currencies at low commissions for users. The Tokyo-based banking giant soon confirmed trials of the digital currency, ahead of a planned launch this year.
Now, the bank has started issuing its MUFG coins to employees on an experimental basis this month, according to major Japanese publication Yomiuri Shimbun.
Today’s report reveals that employees will be able to make 24×7 domestic remittances for free using MUFG coin. As a retail payment token, the bank is also encouraging employees to use the digital currency to make payments at an in-house cafeteria that accepts MUFG coin.
The benefits of a digital currency based on blockchain technology are clear to see. With no clearing agencies or a central authority in a blockchain transaction, banks will see significant cost reductions using the financial technology.
‘If MUFG coin is used for overseas remittances, it is estimated that the commission will be cut to less than one-tenth of that of the current cost of several thousand yen per (international) transaction,” read an excerpt from the report.
One of South Korea’s largest banks has already found a way around high fees in international payments. Shinhan Bank launched a bitcoin-backed remittance service for the Korea-China corridor in late 2016, making use of an intermediary Hong Kong-based bitcoin exchange to transfer value between Korea and China.
Perhaps notably, MUFG has partnered US-based FinTech firm Ripple as a member of the firm’s Global Payments Steering Group (GPSG) this year. The working group sees a handful of banks coming together to support a ‘rules-based blockchain network’ enabling global money transfers over a blockchain by 2018.
While unconfirmed, it is rumored that the bank will issue MUFG coins commercially in Autumn 2017 (between September-December).
Featured image from Shutterstock.
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