- BOJ plans to test the basic functions necessary for a CBDC by next year
- The central bank said there will be high demand for the digital currency, following the increasing rate of digital payments.
Most countries like Japan, which has already initiated plans to develop a potential national digital currency, are stepping up efforts as the need for the central bank-issued digital currency (CBDC) becomes clearer. However, the Japanese central bank still maintains that it does not have any plans to launch such digital currency for the moment. Every development made towards the CBDC is only meant to prepare them in case the need for it becomes inevitable in the future.
That said, the Japanese central bank has, on Friday, disclosed that they are set to trial the processes for issuing potential Japan’s CBDC in April next year. This comes as the country continues to note technological advancements.
BOJ is confident about Japan’s CBDC
Notably, many people are increasingly shifting to digital methods to process monetary transactions, resulting in the growth rate of digital payments. Experts believed that the coronavirus pandemic propelled the shift to digital methods, most of which are controlled by private institutions, sometimes, without adequate security measures. For this reason, most central banks chose to develop CBDCs to enable a faster and secure means of digital payment.
Going with the trend in digital payments, the central bank of Japan (BOJ) is quite confident and has opined that there will be a huge demand from the public for a potential Japan’s CBDC. The BOJ is hopeful about this, following the advantages associated with CBDCs, one of which includes an instant and convenient means of settlement. Additionally, CBDCs are secured and can be accessed universally.
BOJ prepares to test potential Japan’s CBDC
Starting in April 2021, the Japanese bank intends to debut the digital currency pilot through a Proof of Concept (PoC), which aims at testing the essential functions for the issuance of potential Japan’s CBDC. During this time, the BOJ will focus on experimenting with the technical feasibility and other required features necessary to ensure a viable national digital currency.
Basically, the central bank is looking to debut a multi-purpose CBDC whenever it is ready for it. However, the BOJ did highlight in the report that Japan’s CBDC will not outrightly replace cash. It will be launched along with the fiat currency to complement payments.