The Bank of Japan is preparing to launch a pilot test for a digital yen, its central bank digital currency (CBDC), later this year. Shinichi Uchida, executive director of the Bank of Japan, explained that the objectives of this new pilot are to test the technical feasibility of the currency and include private companies in its design process.
Bank of Japan to Continue Digital Yen CBDC Experimentation
The Bank of Japan is advancing its research for the issuance of a hypothetical Japanese central bank digital currency (CBDC), the digital yen. On February 17, Shinichi Uchida, CEO of the Bank of Japan, announced that the bank had decided to launch a new pilot for the digital yen, as a continuation of two proof-of-concept phases.
Uchida said that the new pilot will focus his activities in two directions. The first will be the fine-tuning of the technical aspects of the coin, to test new use cases and integrate the system with other structures.
He declared:
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.
The second direction has to do with the inclusion of 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, with private entities in the area of payments invited to contribute to the project.
an internal pilot
Uchida also explained how the announced pilot tests will be carried out. The Bank of Japan will take a gradual approach, first proposing narrower targets and then expanding the scope of the program. Furthermore, he clarified that the new pilot will not include transactions between retailers and consumers, and only simulated transactions will be settled during this test.
The launch of this test is not a surprise, since Nikkei had reported on it in November. At the time, the outlet reported that the tests would last for two years and would focus on testing the functionality of the system in offline environments.
Even with the launch of this pilot program, the issuance of a digital yen is still not secure. In March last year, Haruhiko Kuroda, Governor of the Bank of Japan, stated that there were no plans to issue a CBDC.
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