The central bank of Japan has announced that it will begin experimenting with a central bank digital currency (CBDC) to check its feasibility from a technical perspective. The central bank expressed its interest in creating a digital version of its national currency yen. This is the first time that the Bank of Japan as revealed that it would commence a Proof of Concept process with the digital yen, but the bank is yet to reveal a timetable.
The Bank of Japan would check the feasibility of the CBDC from a technical perspective.
According to a report published in the Technical Hurdles for CBDC, the Bank of Japan stated that it would “check the feasibility of CBDC from technical perspectives, collaborate with other central banks and relevant institutions, and consider introducing a CBDC.” In February, it was reported that the central banks of Britain, the eurozone, Japan, Canada, Sweden, and Switzerland had announced a plan to collaborate on researching issuing centralized digital currencies. Several other countries are currently studying and planning to issue digital currency in the future. The central bank of Japan thinks there are two major technical hurdles: universal access and resilience.
China is all set to become the first major nation to issue a CBDC.
The People’s Bank of China has been working on its central bank digital currency for the last five to six years. The PBoC is currently testing the digital yuan dubbed as DCEP (Digital Currency Electronic Payment) in four cities. China is all set to become the first major nation in the world to issue its centralized digital currency. Some experts have claimed that digital yuan could potentially threaten the global dominance of the US dollar. Several other central banks are also looking to issue their CBDCs. Earlier, the central bank of Canada expressed its interest in a digital version of the Canadian dollar.