The Bank of Japan is preparing to launch a pilot test of the digital yen, its central bank digital currency (CBDC), later this year. Shinichi Uchida, chief executive of the Bank of Japan, explained that the goals of this new pilot project are to test the technical feasibility of the currency and involve private businesses in the development process.
The Bank of Japan will continue experimenting with the digital CBDC yen
The Bank of Japan is moving ahead with its research on issuing a hypothetical Japanese Central Bank Digital Currency (CBDC) digital yen. On February 17, Shinichi Uchida, chief executive of the Bank of Japan, announced that the bank had decided to launch a new digital yen pilot as part of two phases of proof of concept.
Uchida said that the new pilot will focus on two areas. The first will be fine-tuning the technical aspects of the currency in order to test new use cases and integrate the system with other structures.
He announced:
We plan to develop an experimental system in which the central system, intermediate network systems, intermediate systems and end devices will be configured in an integrated manner.
The second is to include private institutions in the pilot to provide feedback and help improve the design of the digital yen. To achieve this goal, the Bank of Japan will establish a CBDC Forum where individuals in the payment industry will be invited to contribute to the project.
Domestic pilot
Uchida also explained how the announced pilot trials would be carried out. The BOJ will take a phased approach, first offering narrower targets and then expanding the scope of the program. In addition, he explained that the new pilot will not include transactions between retailers and consumers, and only simulated transactions will be calculated during this test.
The launch of this test did not come as a surprise as the Nikkei reported on it back in November. At the time, the publication reported that the tests would last two years and would focus on testing the functionality of the system offline.
Even with the launch of this pilot program, issuing a digital yen is still no guarantee. Last March, Haruhiko Kuroda, Governor of the Bank of Japan, said he had no plans to issue a CBDC.
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