February 21, 2023

According to its central bank, Japan will begin a pilot program in April to test the use of a digital yen, joining a growing number of nations vying to overtake leader China in the introduction of a central bank digital currency (CBDC).

The highly anticipated action comes after two years of tests the Bank of Japan (BOJ) has run to determine whether to issue a CBDC. Additionally, it occurs before Haruhiko Kuroda, the current BOJ chief, passes the gavel to academic Kazuo Ueda. April marks the conclusion of Kuroda’s second five-year term.

In his opening remarks at the central bank’s meeting with executives from the private sector, BOJ Executive Director Shinichi Uchida stated, “Our goal is that the pilot programme will lead to improved designs through discussion with private companies.”

According to Uchida, the BOJ will simulate transactions with private financial institutions as part of the pilot initiative. According to him, it has no plans to carry out real transactions between retailers and customers.

According to the bank, the program will help the BOJ be ready in the event that the government chooses to issue a digital yen.

“If a CBDC were to be issued in the future, exploring its framework in such a phased manner and engaging in highly transparent communication with the private sector are necessary steps to take for adoption in society,” said Uchida, who has been selected by the government to serve as the next deputy governor of the BOJ.
Japan and other developed nations are attempting to overtake China, which is leading the global sprint to create CBDCs and has accelerated the development of pilot programs for retail payments.

Source: Reuters
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