Japan to Trial Digital Yen With Three Megabanks in Early 2023
- The Bank of Japan will collaborate with three Japanese megabanks on a CBDC with offline functionality starting early next year.
- The central bank plans to experiment and stress test the potential digital yen for two years, and make a final decision on whether to widely issue it by 2026.
Bank of Japan headquarters in Nihonbashi, Chūō, Tokyo. Kaisuke Ota/Nikkei Asian Review
The Bank of Japan (BoJ) is planning to conduct a central bank digital currency (CBDC) tests early next year with the participation of three megabanks, local news outlet Nikkei reported on 23 November.
According to the publication, the pilot program is scheduled to begin in spring of 2023, and will provide a demonstration of how a digital yen could be issued in the country. The central bank of Japan will cooperate with several major private banks and organizations to identify and solve any problems related to customer deposits and withdrawals. One of the priorities of the BoJ is that the CBDC has offline functionality, enabling it to operate during natural disasters.
The central bank also revealed that it plans to proceed with its CBDC experimentations for about two years, and make a final decision on whether to issue a digital yuan to the public sometime in the 2026. Although Nikkei’s report did not name the banks that will participate in the experimentation, the “three megabanks” likely refers to the Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho financial groups.
The BoJ is the latest in a series of central banks that have launched some type of CBDC research and development initiatives. China, however, is the one leading the race for a digital currency, with the People’s Bank of China (PBoC) expanding its digital yuan trials to WeChat earlier this year, one of China’s most popular payment services.
Last month, the Reserve Bank of India launched a wholesale CBDC pilot with nine locally operated banks, and this Tuesday also revealed it is preparing to launch a retail pilot for the digital rupee in December, in collaboration with the State Bank of India. Starting January 2023, Australia’s central bank will also be conducting CBDC trials to identify and understand innovative business models, use cases, benefits, risks, and operational models for a CBDC in the country.
- The head of China’s central bank digital currency institute said the e-CNY has undergone a major upgrade, and should be made available as an option in all retail scenarios.
- The PBOC official noted that platforms can integrate the CBDC in the short term using QR codes, and focus on upgrading their payment tools in the long run.
Office building of the People’s Bank of China. Flickr
- The current governor of Florida, Ron DeSantis, announced he is joining the race for the 47th president of the U.S. during a Twitter Spaces event on Wednesday.
- During his speech DeSantis declared his support for Bitcoin and the wider crypto space, noting that if Joe Biden is re-elected “they’ll probably end up killing it”.
- Planned for 1 April, the CBDC trial will involve real consumers and real transactions, though they will be limited to a certain number of customers and transfers.
- The pilot, however, will not be opened to the general public in its first phase, and will only be opened to customers chosen by the 13 participating local banks.