The Japanese central bank could begin piloting the digital yen as early as spring 2023 and will reportedly start a trial involving “consumers and private sector companies.”
Per Nikkei, sources close to the matter confirmed that the Bank of Japan (BoJ) is close to completing its “basic functions” tests on the central bank digital currency (CBDC) prototype. Assuming there are no last-minute issues, the BoJ will then move on to “second-phase pilot testing” that “will begin in the spring of 2023.”
The BoJ has previously stated that it wants “second-phase pilot tests” to “involve private businesses and consumers.”
The same media outlet claimed that the BoJ is already in talks with “three mega-banks” as well as several regional banking players ahead of the pilot. It also added that these financial companies had “a positive attitude” to the pilot.
How Close is Japan to Launching a Digital Yen?
The BoJ is keen to experiment with issues such as transaction speeds and interest accrual in the new phase of the pilot.
But it appears likely that the bank will want to move forward with pilots not unlike those being conducted in nearby China. Beijing has essentially released its digital yuan in a number of its biggest financial hubs – and has experimented with both online and offline functionality.
However, unlike the Chinese CBDC, which does not make direct use of blockchain technology, the BoJ’s prototype is more likely to make use of some of the IT advances that are used in cryptoassets.
The BoJ has repeatedly claimed that it is “yet to decide” whether it will indeed seek to launch a CBDC.
Instead, it has stated that a “national consensus” would need to be achieved before a token could be launched.
The BoJ Governor Haruhiko Kuroda told a parliamentary session back in January this year that a decision on digital yen issuance might not be forthcoming until 2026. However, Japan’s breakneck pace of pilot development would appear to suggest otherwise.