Japan to Launch CBDC Testing in April: Report
• Japan’s central bank, the Bank of Japan, is reportedly launching a CBDC testing program in April 2021.
• The tests will involve processing simulated transactions with private financial companies.
• The bank hopes that the pilot program will lead to improved designs through discussion with private businesses.
Japan Launches CBDC Testing Program
The Bank of Japan (BoJ) will reportedly start its Central Bank Digital Currency (CBDC) experiments this spring. Executive Director at the BoJ Shinichi Uchida said consumers and retailers will be excluded from the experiment, but private financial companies will be involved in processing simulated transactions.
Testing Aims To Prepare For Potential Digital Yen Launch
The testing aims to prepare Japan’s central bank in case it issues a digital version of the national currency. Uchida believes that such a financial product should be discussed with the private sector before going live: „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.“
Modeled After Sweden’s CBDC Experimentation
The BoJ previously said they could take Sweden as a model for how to launch a CBDC. Sweden has also conducted experiments to investigate how people use digital currencies and what benefits they bring if adopted by society as an alternative payment method.
Central Bank Not Planning To Copy China’s Steps
The BoJ reassured last year that it would cautiously approach the CBDC and ensure its compatibility with the domestic monetary ecosystem. It also pledged not to copy China’s steps when introducing its own currency system.
Conclusion
The Japanese government is now preparing for potential digital yen launch by simulating different scenarios through experimentation with private financial institutions. Although modeled after Sweden’s example, it has made clear that it won’t copy China’s approach when implementing its own system.