The Bank of Japan (BOJ) is working with three megabanks as well as regional banks in the Asian nation—and next year will trial a digital yen.
The Bank of Japan (BoJ) is still testing a potential digital yen despite Japan’s uncertainty over whether to issue a central bank digital currency (CBDC).
According to a Nov. 23 report by the regional news agency Nikkei, the Japanese central bank has begun working with three megabanks and regional banks to conduct a CBDC issuance pilot.
The pilot program aims to offer demonstration experiments for the issuance of the digital yen, Japan’s national digital currency, beginning in the spring of 2023.
The BoJ is anticipated to work with significant private banks and other organizations as part of the trial to identify and address any problems relating to customer deposits and withdrawals from bank accounts.
The pilot will, according to the report, test Japan’s potential CBDC’s offline functionality, focusing on payments made without the use of the internet. According to the report, Japan’s central bank intends to continue its CBDC experiment for about two years before deciding whether to launch a digital currency by 2026.
The announcement comes as governments around the world ramp up their efforts to conduct research and develop CBDC, with China taking the lead in this regard.
In collaboration with significant regional banks, including the State Bank of India, the Reserve Bank of India is getting ready to launch a retail pilot of the digital rupee in December, as reported on November 22.
In partnership with industry heavyweights like BNY Mellon, Citi, HSBC, and others, the Federal Reserve Bank of New York’s Innovation Center announced the start of a 12-week proof-of-concept CBDC pilot in the middle of November.
Some nations, like Denmark, have pulled out of the race to introduce a CBDC while the majority of the world has hurried to do so. The central banks gave a variety of reasons for abandoning their CBDC or CBDC-related projects, including potential challenges for the private sector, dubious value and benefits, and other problems. However, no central bank has completely ruled out the possibility of establishing a CBDC.
