• The Bank of Japan is launching a pilot test for a digital yen, its central bank digital currency (CBDC), later this year.
• The goals of the pilot are to test the technical feasibility of the currency and involve private businesses in its design process.
• An internal pilot will be conducted with simulated transactions and contribution from private institutions through a CBDC Forum.
Bank of Japan to Launch Digital Yen CBDC Pilot
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 goals of this new pilot are to test the technical feasibility of the currency and to include private businesses in its design process.
Goals for Pilot Test
The Bank of Japan is advancing in its research for the issuance of a hypothetical Japanese central bank digital currency (CBDC), the digital yen. On Feb. 17, Shinichi Uchida announced that two directions were chosen for this new pilot: fine-tuning the technical aspects and including private institutions in order to provide feedback on design improvements.
Uchida also explained that an incremental approach would be taken with narrower objectives first before expanding scope and only simulated transactions will be conducted during this test period. The goal is to develop an integrated system consisting of a central system, intermediary network systems, intermediary systems, and endpoint devices while also allowing private entities to contribute their insights through a CBDC Forum.
Previous Proof-of-Concept Tests
The launch of this test is no surprise as Nikkei had reported about it in November with expected duration being two years focusing on testing functionality in offline environments. Back in March 2020, Haruhiko Kuroda governor at the Bank Of Japan had stated there were no plans for issuing CBDCs which still remains true today despite advancement on research efforts surrounding digital yens issuance .
All things considered , although further experimentation is still needed , progress has been made towards launching a pilot program by Bank Of Japan concerning issuing a Central Bank Digital Currency ,digital Yen . Private entities have been invited to contribute their insights into how best implement such project as well as work together on fine tuning technical aspects .