Bank of Japan pilots central bank digital currency from April

The Bank of Japan announced on February 17 that it will conduct a demonstration experiment on central bank digital currency (CBDC).

The Bank of Japan has been conducting a CBDC demonstration experiment since April 2021 in line with the “Policy of the Bank of Japan on Central Bank Digital Currencies” announced in October 2020. Among them, the “proof of concept (PoC)” will be completed in March this year, and then the “pilot experiment” will be carried out from April.

In the pilot experiment, we will build an experimental system that integrates the central system, intermediary network, intermediary system, and endpoint devices. No actual transactions involving stores or consumers are envisioned at this time.

In addition, the CBDC Forum will be established to invite participation from private business operators involved in retail payments, and to discuss and consider a wide range of themes. A briefing on how to select forum participants will be held in March.

The introduction of CBDC is under consideration all over the world, and some countries have actually started to introduce it. Especially in China, the “digital yuan” is being experimentally deployed in cities such as Beijing, Shanghai, and Shenzhen, and the transaction volume will reach 100 billion yuan (approximately 13.9 billion yuan) from its start in December 2019 to August 2022. US dollar, about 1.8 trillion yen, converted to 1 dollar = 130 yen).

From October 2020, Cambodia will operate a CBDC using technology developed by Japanese fintech company Soramitsu. Soramitsu recently announced the conclusion of a memorandum of understanding (MOU) for demonstration experiments with the Central Bank of Laos.

Regarding the introduction of CBDC in Japan, the Bank of Japan wrote in its announcement, “It has not been decided at this time, and we believe that it should be decided in the course of future national discussions.”

Various payment methods such as IC card payment and QR code payment have appeared in Japan. CBDC will become an infrastructure that connects these payment methods, and from the user’s point of view, it is thought that the barriers between payment services will disappear. From a business perspective, simplification and speeding up of payments are expected.

｜Text and editing: Takayuki Masuda
｜Image: Shutterstock

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