Bank Of Japan Explores CBDC Prospects By Launching A Pilot Program For Issuing Digital Yen
- April will see the start of a pilot program in Japan to evaluate the usage of the digital yen, which is the country’s equivalent of the CBDC.
- Although China’s digital yuan continues to dominate the CBDC race internationally, the BoJ conducted proof-of-concept tests of the digital yen for more than two years prior to making the decision.
Japan will launch a pilot program to test the usage of a digital yen in April, its central bank announced on Friday, joining a rising number of nations attempting to overtake leader China in the introduction of a central bank digital currency (CBDC).
The highly anticipated action comes after two years of tests the Bank of Japan (BoJ) has run to determine whether to issue a CBDC. Also, it occurred before Haruhiko Kuroda, the current Bank Of Japan chief, passed the gavel to scholar Kazuo Ueda. April marks the end of Kuroda’s second five-year tenure.
According to the bank, the scheme would enable the BoJ to be ready in the event that the government decides to issue a digital yen.
In statements made during the sixth meeting of the BoJ Liaison and Coordination Committee on Central Bank Digital Currency, Executive Director of the BoJ, Shinichi Uchida, said:
“Previously, subjects of PoCs were chiefly the central system. Under the pilot program, however, we plan to develop a system for experiments, where a central system, intermediary network systems, intermediary systems, and endpoint devices would be configured in an integrated manner. On this basis, we plan to test the end-to-end process flow and outline the measures and potential challenges for connecting the experimental system with external ones.”
According to Uchida, as part of the pilot initiative, the BOJ would replicate transactions with private financial institutions in a testing setting. He states it has no plans to carry out actual transactions between shops and customers.
Japan and other developed nations are attempting to overtake China, which is leading the global race to create CBDCs and has accelerated the development of pilot programs for retail payments. According to the Central Bank, the digital yuan has been tested in several locations and will continue to be used in cutting-edge ways in the coming years.
The US Federal Reserve has also been investigating ways to introduce Fedcoin, a totally digital dollar. According to Fed officials, elected officials would need to endorse the launch of any such asset.
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