Bank Of Japan Launches Second Phase Results Trial Of Digital Currency Concept

The Bank of Japan (BOJ) has released the results of the second phase of the proof-of-concept (PoC) experiment of central bank digital currency (CBDC) (photo: dock. boj)

JAKARTA - The Bank of Japan (BOJ) has released the results of the second phase of the proof-of-concept (PoC) experiment of central bank digital currency (CBDC) and confirmed that its CBDC pilot project was launched on schedule in April.

The second phase of PoC lasted for one year, from April 2022 to March 2023, and considered functions to complement the basic ledger functions tested in first year experiments.

According to the BOJ report, the second stage is testing technology to implement an upper limit on CBDC ownership, which is described as "protection that guarantees financial system stability" in the event of a sudden shift from bank account to CBDC.

This includes a case where a user has several accounts with different intermediaries. The ease of users starting and scheduling payments is also a concern.

In the backend section, experiments with database languages and ledger designs were conducted, and flexible value token models were tested. The orchestration system is implemented to handle recurring transactions with the same account faster.

The experiment involved 100,000 users with five intermediaries and saw transaction loads of 500 and 3,000 transactions per second, with discussions on increased scalability. Privacy is considered throughout the experiment, but is not discussed in detail. Offline payments are discussed in the context of fraud prevention and privacy maintenance.

The PoC was declared successful in achieving the desired results, and the report confirmed that BOJ had resumed its scheduled CBDC pilot project. The pilot project will examine "flows of end-to-end processes" and further connections with external systems.

"The decision to issue a CBDC must be determined through discussions among Japanese society," the report said, quoted by Cointelegraph.

A CBDC Forum will be formed to gain insight from private businesses. BOJ has stated that it will make a final decision on the issuance of CBDCs by 2026.