The Bank of Japan is preparing to launch a pilot test of a central bank digital currency (CBDC), the digital yen, later this year. Bank of Japan Executive Director Shinichi Uchida explained that the purpose of this new pilot test is to test the technical feasibility of the currency and involve the private sector in the design process.
BOJ to Continue Experiments on Digital Yen CBDC
On February 17, Bank of Japan Managing Director Shinichi Uchida continued the two-stage pilot test and announced the Bank’s decision to launch a new demonstration experiment for digital yen.
Uchida said the new pilot will focus activities in two directions: one is to test new use cases and fine-tune the technical aspects of the currency in order to integrate the system with other structures; the other is to test the new digital yen system in the context of the Bank’s own digital currency system.
that an experimental system would be developed that would consist of a central system, an intermediate network system, an intermediate system, and endpoint devices in an integrated manner.
The second direction has to do with involving private institutions in the experiment to give them feedback on the design of the digital circle and help them improve it. To achieve this goal, the Bank will establish a CBDC forum and invite private organizations in the payments sector to contribute to the project.
In-House Demonstration
Mr. Uchida also explained how the Bank will conduct the pilot test announced in the presentation. The Bank will take a phased approach, first proposing a narrow set of objectives and then expanding the scope. He also clarified that the new pilot test will not include transactions between retailers and consumers; only simulated transactions will be settled in this test.
The launch of this test comes as no surprise, as the Nikkei reported in November. At the time, the newspaper reported that the test would last two years and would focus on testing the system’s functionality in an offline environment.
Even with the start of this test operation, the issuance of electronic yen is not yet a certainty. Last March, Bank of Japan Governor Haruhiko Kuroda said that there were no plans to issue CBDCs.
Image credit: Shutterstock, Pixabay, Wiki Commons
