Japan’s central bank said on Friday that a pilot program to evaluate the usage of a digital yen will begin in April. With this announcement, Japan joins a growing list of nations attempting to overtake leader China in the introduction of a central bank digital currency (CBDC).
The highly anticipated action comes after two years of tests the Bank of Japan (BOJ) has run to determine whether to issue a CBDC. Also, it occurs before Haruhiko Kuroda, the current BOJ chief, passes the gavel to scholar Kazuo Ueda. April marks the end of Kuroda’s second five-year tenure.
In his opening remarks at the central bank’s meeting with executives from the private sector, BOJ Executive Director Shinichi Uchida stated, “Our hope is that the pilot programme will lead to improved designs through discussion with private businesses.”
According to Uchida, the BOJ will replicate interactions with private financial institutions as part of the pilot program. According to him, it has no plans to carry out actual transactions between shops and customers.
According to the bank, the scheme would enable the BOJ be ready in the event that the government decides to issue a digital yen.
“If a CBDC were to be issued in the future, exploring its framework in such a phased manner and engaging in highly transparent communication with the private sector are necessary steps to take for adoption in society,” said Uchida, who has been selected by the government to serve as the next deputy governor of the BOJ.
Japan and other developed nations are attempting to overtake China, which is leading the global race to create CBDCs and has accelerated the development of pilot programs for retail payments.
The American Federal Reserve has also been investigating ways to introduce Fedcoin, a totally digital dollar. According to Fed officials, elected officials would need to endorse the launch of any such asset.