Japan's Central Bank Initiates Experiments on CBDC
Main page News, CBDC, Japan

The Bank of Japan (BoJ) has launched the first phase of experiments with central bank digital currency (CBDC). The regulator plans during Proof of Concept (PoC) Phase 1 to develop a test environment for the CBDC system.

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The regulator also wants to conduct experiments on the basic functions that "are core to CBDC as a payment instrument." Particularly, the BoJ wants to test an issuance, distribution, and redemption. This phase will reportedly be carried out through March 2022, for a duration of one year.

In March, Japan established a new committee focused on CBDC called "Liaison and Coordination Committee on Central Bank Digital Currency".

Japan Accelerates Development of CBDC

With the committee, the BoJ will engage in experiments on general purpose CBDC from fiscal year 2021. While the BoJ has no plans to issue CBDC, Japan decided to join the race of digitization in order to compete with China's digital yuan. Hiromi Yamaoka, a former senior official in charge of payment and settlement systems at the BOJ, said that the watchdog was surprised with China's speed "as central banks tend to take a cautious stance."

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