The Bank of Japan has officially kicked off experiments on a proof of concept for its central bank digital currency. The first testing phase is already live and should be completed by March 2022.
BOJ Takes a Swing at CBDC Development
Japan’s Central Bank has put its mind into issuing its own digital currency. The trial will consist of two phases, according to a recent Reuters coverage.
The initial steps should continue until March 2022. They will concentrate on testing the technical feasibility of how to issue, distribute, and redeem a central bank digital currency (CBDC).
The BOJ noted the organization will join efforts with other central banks in order to match the innovation in the field.
Later on, Japan’s central bank will move to the second phase of the experiments. It will analyze more specific capabilities, such as the option to set limits on the amount of CBDC each entity can control.
BOJ executive director Shinichi Uchida said last month the institution has backed up its plan. He noted that, if necessary, the central bank will kick off a pilot program that involves payment service providers and end-users:
”While there is no change in the BOJ’s stance, it currently has no plan to issue CBDC, we believe initiating experiments at this stage is a necessary step.”
It’s worth noting that the BOJ said in late 2020 it had frozen developments on the CBDC due to the lack of serious demand from the locals.
The BOJ Is Not the First
Reducing the usage of paper money is one of the main goals of many central banks around the world. During the past several years, many of them were looking into launching their own central bank digital currency.
A report from the Bank of International Settlements last year indicated that roughly 80% of all central banks have plans to develop and launch their own CBDC.
China is among the leaders in its attempts to introduce a digital form of the yuan. The most populated country in the world is very close to launching a CBDC after intense research and testing during the last few years.
As CryptoPotato has previously reported, some of the other nations in the list include Sweden, Australia, and Spain.