In order to issue a digital yen, the Bank of Japan (BOJ) will start making preparations this year for a pilot trial with private financial institutions. 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 new initiative seeks to offer demonstration tests for the issuing of the digital yen, Japan's national digital currency, beginning in the spring of 2023.
Governor Haruhiko Kuroda stated in May that offering a retail CBDC might be a possibility to ensure a seamless and secure infrastructure in Japan, even if the BOJ has not yet taken a decision regarding the issue of its own digital currency.
At that time, Kuroda advocated for stronger efforts by international authorities to control hazards that may arise from the widespread usage of private digital currencies during a lecture.
The Bank of Japan is anticipated to work with significant private banks and other organisations as part of the trial to identify and address any problems relating to consumer deposits and withdrawals from bank accounts.
The trial would evaluate Japan's potential CBDC's offline capability, focusing on payments made without the use of the internet. The central bank of Japan intends to continue its CBDC trial for around two years before deciding by 2026 whether to launch a digital currency.
Some nations, like Finland, have pulled out of the battle to introduce a CBDC while the rest of the globe has hurried to do so. The central banks gave a variety of reasons for abandoning their CBDC or CBDC-related projects, including possible challenges for the private sector, dubious value and advantages, and other problems. However, no central bank has totally ruled out the prospect of establishing a CBDC.
The announcement comes as governments throughout the world ramp up their efforts to conduct research and promote CBDC, with China taking the lead in this regard. In conjunction with industry heavyweights including BNY Mellon, Citi, HSBC, and others, the Federal Reserve Bank of New York's Innovation Center announced the start of a 12-week proof-of-concept CBDC pilot in the middle of November.