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Today, the Bank of Japan announced that it has started the first phase of its central bank digital currency trials which will run up to March 2022. The announcement comes after the Bank of Japan published a paper in October 2020 outlining its preparedness for a CBDC trial.
While the yearlong trials were confirmed today, the bank explicitly states that it is not an immediate greenlight for a CBDC in the future. The main objective of the trial is a to “test the technical feasibility of the core functions and features required for CBDC”, for example issuance, distribution and transactions.
In March of this year, the Governor of the Bank of Japan commented on the need to explore the digital currency in a timely yet appropriate manner:
“From the viewpoint of ensuring the stability and efficiency of the overall payment and settlement systems, we consider it important to prepare thoroughly to respond to changes in circumstances in an appropriate manner. Amid significant changes that are occurring with the advent of the digital society, we will take this opportunity to carefully consider the way in which we should provide central bank money.”
Japan’s neighbor China has been trialling their digital Yuan for quite some time now with most recently the trials including commercial banks Webank and MYBank,
China is planning to issue the currency in time for the Beijing 2022 Winter Olympics.