Despite Japan’s uncertainty about whether to issue a central bank digital currency (CBDC), the Bank of Japan (BoJ) continues to experiment with a potential digital yen.
Japan’s central bank has partnered with three mega-banks and regional banks to conduct a pilot CBDC issuance, local news agency Nikkei reported Nov. 23.
The pilot project aims to conduct demonstration experiments for the issuance of Japan’s national digital currency, the digital yen, starting in spring 2023.
As part of the litigation, the Bank of Japan is expected to work with major private banks and other entities to identify and resolve any issues related to customer deposits and bank withdrawals. According to the report, the pilot project will include testing the offline functionality of a possible CBDC in Japan focused on offline payments.
The Central Bank of Japan plans to continue its CBDC experiment for two years and decide on issuing a digital currency by 2026, the report notes.
The news comes as countries around the world are increasingly launching CBDC research and development initiatives, with countries like China leading the global CBDC race.
As reported Nov. 22, the Reserve Bank of India is preparing to launch a digital rupee retail pilot in partnership with major local banks, including the State Bank of India, in December. In mid-November, the Innovation Center of the Federal Reserve Bank of New York announced the launch of a 12-week CBDC pilot project in partnership with banking giants such as BNY Mellon, Citi, HSBC and others.
Related: Japanese international payment system to test plastic cards for CBDC
While much of the world is rushing to launch a CBDC, some countries like Denmark have dropped out of the digital currency race. Among the reasons for abandoning their CBDCs or CBDC-related projects, central banks listed potential hardships for the private sector, questionable value and benefits, and other issues. However, no central bank has completely ruled out the possibility of launching a CBDC.