The Bank of Japan will roll out a pilot program for its central bank digital currency project to three major Japanese banks in spring 2023.
The pilot’s launch will dovetail with the bank’s one-year CBDC experiment set to end in April 2023.
Japan CBDC could come in 2026
The two-year pilot aims to determine any problems with deposits and withdrawals to and from bank accounts. It will also check whether the infrastructure is operational during natural disasters and without an internet connection. The bank will decide whether to take the CBDC live in 2026.
The Bank of Japan governor said in May 2022 that, while the Bank of Japan has not yet decided whether to launch a retail CBDC, the currency will help secure a safe and seamless infrastructure in the country.
Japan joins Asian-led race to CBDC
Several other major global economies are in varying stages of CBDC testing. Others like Nigeria and Jamaica have been using one for some time.
By and large, Asian countries seem to be in more advanced stages of CBDC-related projects.
On Nov. 1, 2022, G-20 member India launched a wholesale CBDC pilot to simplify interbank settlements, with plans for a retail currency to follow. The wholesale CBDC is focused on reducing settlement risk for banks.
The People’s Bank of China plans to expand the rollout of digital wallets for its e-CNY digital currency to several developed provinces by the end of 2022. It has already recorded $13.9 billion in e-CNY digital transactions.
On the other hand, the U.S., eurozone, and U.K. have some catching up to do.
The U.S. Federal Reserve is running a 12-week CBDC proof-of-concept program in partnership with several large financial companies, including Mastercard, HSBC, Citigroup, and Wells Fargo. Commercial banks will issue fungible tokenized dollars settled through simulated central bank reserves on a shared distributed ledger.
Interestingly, the banking group will publicize the trial results but is under no obligation to participate in future phases of the project.
The Bank of England has set up a task force to oversee the use cases and operation for a CBDC but has yet to decide to proceed with one formally. It was originally promoted by former chancellor Rishi Sunak, now the prime minister of the U.K.
The European Central Bank said it aims to launch a CBDC by the middle of the decade.
A CBDC can educate people before it is scrapped
While crypto enthusiasts warn that a CBDC could be a tool to consolidate the power of authoritarian regimes, a potential upside is that it can be a tool to educate people on the ins and outs of digital wallets and holding and spending digital currencies.
Once familiarized with digital transactions, CBDC users could easily opt to use cryptocurrencies alongside a CBDC or even scrap the CBDC altogether, as Nigerian citizens have done.
In Nigeria, e-Naira adoption had reached only 0.5% of its population a year after its launch, with citizens preferring private cryptocurrencies. Hampering adoption was the population’s general mistrust of the ruling elite and a certain degree of confusion.
As of Nov. 2, 2022, Nigeria ranked #11 globally for Bitcoin adoption.
In other Japan-related news, the national football team beat Germany 2-1 in the 2022 FIFA world cup in Qatar on Nov. 23, 2022.
For Be[In]Crypto’s latest Bitcoin (BTC) analysis, click here.
Disclaimer
In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.
