Japan Launches Central Bank Digital Yen Currency Experiment

Japan Launches Central Bank Digital Yen Currency Experiment

The Bank of Japan (BoJ) is still testing a prospective digital yen despite Japan's uncertainties on whether to issue a central bank digital currency (CBDC) or not.

According to a Nov. 23 article by the regional news agency Nikkei, the Japanese central bank has begun working with three megabanks and regional banks to execute a CBDC issuance trial.

The pilot program aims to offer demonstration tests for the issuing of the digital yen, Japan's national digital currency, beginning in the spring of 2023.

The BoJ is anticipated to work with major private banks and other organizations as part of the trial to identify and address any problems relating to consumer deposits and withdrawals from bank accounts. The trial would, according to the report, test Japan's potential CBDC's offline capability, focusing on payments made without the use of the internet.

Japan's central bank intends to continue its CBDC experiment for around two years before deciding whether to launch a digital currency by 2026.

The announcement comes as governments throughout the world speed up their efforts to conduct research and promote CBDC, with China taking the lead in this regard.

The Reserve Bank of India is getting ready to launch a retail test of the digital rupee in December in association with significant regional banks, including the State Bank of India. In mid-November, the Federal Reserve Bank of New York’s Innovation Center announced the launch of a 12-week proof-of-concept CBDC pilot in partnership with banking giants like BNY Mellon, Citi, HSBC and others.

On the other hand, some nations, like Denmark, have pulled out of the race to introduce a CBDC while the remainder of the world has hurried to do so. The central banks gave a variety of reasons for abandoning their CBDC or CBDC-related projects, including potential challenges for the private sector, questionable value and advantages, and other problems. However, no central bank has totally ruled out the prospect of establishing a CBDC.

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