The Bank of Japan (BOJ) has announced the pilot program for the country’s Central Bank Digital Currency (CBDC), set to kick off in April 2023. Over the past two years, the BOJ has conducted tests to explore the feasibility of introducing a digital yen for the country.
The Executive Director of BOJ, Shinichi Uchida, commented on the pilot program saying it would develop better ways of using digital currency. He emphasized the importance of starting the process gradually and communicating the developments with the private sector.
The program is set to prepare the BOJ in case the government decides to issue a digital yen. Test transactions will be carried out between private financial institutions in a controlled environment during the program. However, there will be no transactions involving retail consumers.
Kazuo Ueda, a Japanese economist, is expected to take over the leadership of the Bank of Japan from Haruhiko Kuroda, the current Governor, in April. Governor Kuroda was elected in March 2013 and has led the bank through different economic stages and maintained a negative interest rate since 2016, even while other countries were battling inflation.
The Bank of International Settlements (BIS) released a report on the state of CBDCs in different countries. These countries include Japan, China, India, and others. According to the report, 9 out of 10 central banks globally are experimenting with digital currencies. It also stated that the creation of stablecoins and other cryptocurrencies had accelerated the process of developing digital currencies.
China was the first country to begin preparations for the CBDC in 2014. According to the Wall Street Journal, the currency won’t be issued in large quantities to not trigger inflation. China Central Bank also said the digital payment system would reduce money laundering and gambling in the country.
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