Japan is all set to launch a pilot program In April this year to test its digital currency Yen, announced the Bank Of Japan on Friday. The goal of this initiative is to explore the potential benefits and challenges of a digital yen, which could lead to its eventual adoption as a legitimate currency in Japan.
Bank of Japan has been conducting experiments in the last 2 years for CBDCs to make a decision on the launching of digital currency. The country has not been actively digitizing its payment systems, however, this move was highly expected.
It was up to the citizens of Japan to decide if they want the issuance of CBDC, however, in case the government decides to launch a digital currency, the central bank of Japan will be prepared for the same.
What motivated CBDC issuance in Japan?
This comes amid the news of major countries being in a run to launch their own CBDC led by China. This also comes after the information was made public before the Bank of Japan’s upcoming leadership transition from Haruhiko Kuroda to academic Kazuo Ueda. Kuroda’s current term as BOJ governor will end in April, and Ueda is expected to succeed him.
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BOJ’s take on the pilot survey of CBDC
BOJ Executive Director Shinichi Uchida said that they are hopeful that the pilot program will help them to come up with better and improved methods for CBDCs. He added that in order for future issuance of a Central Bank Digital Currency (CBDC) to be successful, it is important to approach its framework in a gradual manner and communicate transparently with the private sector throughout the process. This will be crucial for ensuring its widespread adoption in society.
However, during the pilot program, the BOJ will carry out simulated transactions with private financial institutions in a controlled testing environment, according to Uchida. The bank has no plans to conduct real transactions involving consumers and retailers.
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