According to an official announcement on Monday, the Japanese central bank, Bank of Japan, has launched a proof of concept for its central bank digital currency, or CBDC. Following initial preparations to test the technical feasibility of core CBDC functions and features in early 2021, the central bank is beginning CBDC testing in its first phase today. Central banks around the world are actively working on digital currencies.
The bank plans to develop a test environment for the CBDC system.
The Bank of Japan plans to develop a test environment for the CBDC system and conduct experiments on basic functions related to payment, issuance, distribution, and redemption of a CBDC. According to the announcement, this phase is expected to be completed by March 2022. The central bank had initially announced its plans to launch CBDC testing in October 2021. The bank emphasized that while it “has no plan to issue CBDC” from the viewpoint of ensuring the overall payment and settlement systems’ stability and efficiency, it is still important to prepare for “changes in circumstances in an appropriate manner.”
The bank plans to start a pilot CBDC program involving payment service providers.
According to the original CBDC experiment roadmap, the central bank expects to start a pilot CBDC program involving payment service providers and end-users after the completion of the second phase of testing. This phase will implement additional CBDC functions in the test environment developed in the first phase and determine their feasibility. As reported earlier, the Bank of Japan recently announced the Liaison and Coordination Committee’s establishment to collaborate with both the private sector on the upcoming CBDC pilots. The People’s Bank of China leads the CBDC race as the Asian country gets closer to launching the digital yuan to the general public.