Japan Set to Launch Pilot Testings For its CBDC in April

The central bank of Japan popularly known as the Bank of Japan (BoJ) which has been earnestly putting plans in place to commence the pilot testing phase of its digital currency, has decided to roll out a pilot program for its Central Bank Digital Currency (CBDC) in April 2023.

As per the published statement on February 17, participating users will not carry out actual transactions during this period but only simulated transactions will be done to examine the possible use cases of the digital currency. Furthermore, the pilot phase will explore modes to integrate this form of payment with existing financial networks as well as infrastructure to facilitate offline payments.

Additionally, the launch of the digital Yen in the country will allow a range of benefits, such as minimal overall currency management, and reduced settlement risk, amongst other benefits. The bank will also seek clarity into the feasibility and technicality of the digital currency while providing the general public with a convenient electronic form of central bank money together with safety.

Interestingly, this new announcement is the latest attempt by the BoJ as it continues to work towards achieving a digital currency. Recall that last year, the executive director of BoJ Shinichi Uchida gave a speech where he clarified that once launched, the digital Yen will not be utilized to achieve negative interest rates.

Central Banks and the CBDC Phenomenon

The subject of CBDC is becoming commonplace amongst apex banks today, as such financial institutions, as well as governments, are keen on introducing a more controlled and stable alternative that will offer a similar benefit as the privately issued cryptocurrencies. Most monetary authorities also intend to develop their CBDC with the aim of making both the fiat and digital monies co-exist.

The Reserve Bank of Australia (RBA) revealed its plans last year to launch a one-year research program into the potential economic benefits of its CBDC while partnering with the Digital Finance Cooperative Research Centre (DFCRC), a government-sponsored industry group.

Following its plans, RBA and DFCRC released a white paper for the pilot of its digital currency dubbed “eAUD” which would run from January to April 2023 with a few selected use cases.

Equally, the National Bank of Ukraine (NBU) released a concept note for the launch of its digital currency dubbed e-hryvnia which will provide an additional option to the present options of money.