The Bank of Japan is preparing to launch a pilot test for a digital yen, its central bank digital currency (CBDC), later this year. Shinichi Uchida, executive director of the Bank of Japan, explained that the goals of this new pilot are to test the technical feasibility of the currency and to include private businesses in its design process.
Bank of Japan to Continue Digital Yen CBDC Experimentation
The Bank of Japan is advancing in its research for the issuance of a hypothetical Japanese central bank digital currency (CBDC), the digital yen. On Feb. 17, Shinichi Uchida, executive director of the Bank of Japan, announced the bank had decided to launch a new pilot for the digital yen, as a continuation of two phases of proof-of-concept tests.
Uchida said that the new pilot will focus its activities in two directions. The first one will be the fine-tuning of the technical aspects of the currency, in order to test new use cases and integrate the system with other structures.
He declared:
We plan to develop a system for experiments, where a central system, intermediary network systems, intermediary systems, and endpoint devices would be configured in an integrated manner.
The second direction has to do with the inclusion of private institutions in the pilot to provide feedback and help improve the design of the digital yen. To achieve this goal, the Bank of Japan will establish a CBDC Forum, with private entities in the payments area being invited to contribute to the project.
An Internal Pilot
Uchida also explained the way in which the announced pilot tests will be executed. The Bank of Japan will take an incremental approach, proposing narrower objectives first and then expanding the scope of the program. Also, he clarified the new pilot will not include transactions between retailers and consumers, with only simulated transactions being settled during this test.
The launch of this test is no surprise, as Nikkei had reported about it in November. At that time, the outlet informed the tests would have a duration of two years, and would focus on testing the functionality of the system in offline environments.
Even with the launch of this pilot program, the issuance of a digital yen is still not a sure thing. In March last year, Haruhiko Kuroda, governor of the Bank of Japan, stated there were no plans for issuing a CBDC.
What do you think about the new pilot program for the digital yen? Tell us in the comments section below.