Japan Is Set to Launch Digital Yen (CBDC) Pilot in April

digital yen
digital yen

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On Friday, Japan’s central bank announced that it will begin a pilot program in April to test a digital yen. This is part of a global trend of countries working to catch up to China, which is leading the way in the launch of a central bank digital currency (CBDC).

  • What: Japan’s central bank announced that it will begin a pilot program in April to test a digital yen.
  • Why: The hope is that the program will lead to improved designs through collaboration with private businesses.
  • What next: The BOJ will carry out simulated transactions with private financial institutions in a test environment as part of their pilot program.

After conducting experiments for two years to decide on the issuance of a CBDC, the Bank of Japan (BOJ) is now widely expected to launch a digital yen. The timing of the announcement coincides with the upcoming leadership transition at BOJ. This comes as incumbent Haruhiko Kuroda’s second five-year term ends in April. Academic Kazuo Ueda is expected to succeed him as the new head of BOJ.

In the opening remarks of the central bank’s meeting with private-sector executives, BOJ Executive Director Shinichi Uchida said the pilot program aims to improve designs by talking to businesses. The program involves the BOJ conducting simulated transactions with private financial institutions in a test environment rather than actual transactions among retailers and consumers. The hope is that the program will lead to improved designs through collaboration with private businesses.

Uchida, the next BOJ deputy governor, emphasized the importance of a phased approach and transparent communication with the private sector in exploring the framework for issuing a central bank digital currency (CBDC). According to Uchida, these steps are necessary to adopt a CBDC in society successfully.

As China leads the global race to develop CBDCs and has also launched pilot schemes for retail payments, Japan and other advanced economies are also pursuing this technology. The U.S. Federal Reserve is exploring the launch of a fully digital dollar, known by some as Fedcoin, but officials have stated that any such launch would require the backing of elected leaders.

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Source: https://insidebitcoins.com/news/japan-is-set-to-launch-digital-yen-cbdc-pilot-in-april