In a bid to seek clarity into the feasibility and technicality of a central bank digital currency (CBDC), the Bank of Japan (BOJ) has started experiments with three megabanks as well as regional banks in the country towards the issuance of a “digital yen”.
According to a report today, Japanese banks together with some private financial institutions and organizations intend to ascertain the obstacles behind the issuance of the CBDC.
The experiment is set to begin in early 2023 and will last for about two years. Hopefully, after a positive result at the end of the experiments, the government will make a decision in 2026 on the adoption of the digital yen.
Furthermore, the experiment will help identify problems with deposits and withdrawals. It will also help check whether or not the CBDC will function well whenever and wherever there is no internet access. Also, the Bank of Japan plans to make CBDC universally accessible to the public.
Notably, the research also aims to analyze the forms of economic benefits the CBDC can offer.
Meanwhile, earlier this year, the Governor of the BOJ sought collaboration with the United States Federal Reserves as well as the European Central Bank (ECB) in creating a global standard for the issuance of a CBDC.
Countries Intensify Efforts to Launch CBDCs
It is no news that tens of nations around the world are exploring the creation of their own digital currency, mostly with the aim of innovating and easing the burden off their payment ecosystem. Most monetary authorities also intend to develop their CBDC with the intention of making both the fiat and digital monies co-exist.
Aside from Japan, a South American megadiverse country, Colombia also explored various options for the development of CBDC in its country with the aim of improving its payment system.
Likewise, the Reserve Bank of Australia (RBA) in August made its intentions to launch a research project into central bank digital currency. In the project, RBA will explore several use cases to ascertain the potential and most suitable design for a potential CBDC.