The central Bank of Japan (BoJ) is set to launch a pilot for a digital yen this Spring, although the central bank is still a long way from making up its mind on whether it will push ahead with issuance.
Per NHK, the BoJ appears to be aware that China, which is already committed to launching its own central bank digital currency (CBDC), is “leading the way in this field,” while other central banks are also entering advanced stages of their own projects. As such, the BoJ “wants to ready a response to changes in the international environment.”
The BoJ has called its pilot “first-stage testing,” using a token that will perform the basic functions of a CBDC. The pilot will also focus on distribution and issuance-related matters. The bank wants to experiment with ledger technology, transaction history innovations and interoperability solutions with private businesses.
The BoJ has stated that its initial pilot will last for “about one year,” and will then move on to a “second stage” – a feasibility-related pilot – should results from stage one prove promising enough.
Tokyo initially shied away from the notion of rolling out a digital yen, with some government and financial chiefs stating that existing private-sector electronic payment systems reduced the need for a central bank-issued alternative.
However, the nation is famously cash-reliant, particularly in the case of older citizens – an idiosyncratic quirk in what is one of the most technologically advanced societies on the planet.
And the progress of the digital yuan – which is almost certain to debut ahead of the Beijing Winter Olympic Games 2022 (now less than 12 months away) – is thought to have sparked both the BoJ and the South Korean Bank of Korea into action.
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