The Bank of Japan has announced it will launch its central bank digital currency (CBDC) pilot, the digital yen, in April. It joins a roster of Asian countries issuing CBDCs.
CBDCs have been rising in popularity for the past few years. The popularity has increased to a level that the crypto-skeptic economist Nouriel Roubini believes that CBDCs might challenge the dominance of the U.S. dollar.
Japan becomes the latest country to join the fray, announcing today its digital yen pilot program.
CBDC Program to Be Tested by Private Businesses
Uchida Shinichi, the Executive Director of the BoJ, announced the launch of the digital yen pilot program at the Fifth Meeting of the Liaison and Coordination Committee on CBDC.
The central bank started working on building a foundation for CBDC in its Proof of Concept (PoC) Phase one in April 2021. The BoJ began PoC Phase 2 in April 2022, when they tested technical feasibility and performance. Finally, after PoC testing, the bank has decided to launch the pilot in April.
Shinichi says, “The aim of the pilot program is twofold: first, to test the technical feasibility not fully covered by the PoCs, and second, to utilize the skills and insights of private businesses in terms of technology and operation for designing a CBDC ecosystem in the possible event of social implementation.”
Japan is not issuing CBDC for retailers presently, it will just test the settlement through simulated transactions. Japan previously banned foreign stablecoins like USDC and USDT, but it is expected to lift the ban in 2023.
Asian countries like China and India have already launched their CBDCs. The People’s Bank of China said in January that its pilot program for digital yuan is up and running. China’s neighbor, India, started its retail pilot of the digital rupee last December.
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