According to the Reuters report, the move came in tandem with an announcement by a group of seven major central banks, including the Bank of Japan, on what they see as core features of a central bank digital currency (CBDC) such as resilience and a clear legal framework. The announcement also falls in line with new Japanese Prime Minister Yoshihide Suga’s focus on promoting digitization and administrative reform to boost competitiveness in this sector. A CBDC could also help boost small business ideas in the country.
The Bank of Japan will start experimenting with a CBDC.
In a report laying out its approach on CBDC, the Bank of Japan said it would conduct the first phase of experiments on basic functions core to CBDCs, such as issuance and distribution, early in the fiscal year beginning in April 2021. The experiments will be part of the central bank’s efforts to look more closely into how it can issue general-purpose CBDCs, intended to be used widely among the general public, including companies and households. The Bank of Japan also plans to have financial institutions and other private entities serve as intermediaries between the central bank and end-users, rather than have companies and households hold deposits directly with the BOJ.
Central banks across countries continue to experiment with CBDCs.
Central banks worldwide have expressed interest in CBDCs, and many of them are working actively on the same. The People’s Bank of China is all set to become the first major nation to launch its national digital currency. PBoC has been working on its national digital currency, dubbed DCEP, for the last five to six years and is now very close to issuing it to the general public. As reported earlier, the Bank for International Standards revealed that CBDC was more searched than bitcoin and Libra this year.