Japanese Central Bank Trials For Digital Yen With Three Local Banks

JAKARTA - Despite Japan's uncertainty about whether to issue a central bank digital currency (CBDC), the Bank of Japan (BoJ) continues to experiment with their digital yen potential.

According to a report by the Nikkei news agency on November 23, Japan's central bank has also begun cooperation with three major banks and regional banks to conduct a trial for the issuance of CBDCs,

The trial aims to provide a demonstration experiment for Japan's national digital currency issuance, the digital yen, starting in the spring of 2023.

As part of the trial, BoJ is expected to cooperate with large private banks and other organizations to detect and resolve any issues related to deposits and customer withdrawals in bank accounts.

According to the report, trials will involve testing offline functionality from a possible Japanese CBDC, which targets internetless payments.

Japan's central bank plans to resume its CBDC experiment for about two years and makes a decision on whether to issue a digital currency by 2026, the report notes.

The news comes amid countries around the world increasingly launching CBDC research and development initiatives, with countries like China leading the global CBDC race.

As Cointelegraph reported on November 22, the Reserve Bank of India is preparing to start a pilot on digital rupees retail in collaboration with major local banks including Bank Negara India in December.

In mid-November, the Federal Reserve Bank of New York's Innovation Center announced the launch of a 12-week proof-of-concept CBDC trial in partnership with banking giants such as BNY Mellon, Citi, HSBC, and others.

While most of the world is rushing to launch CBDCs, several countries such as Denmark have left the digital currency race. There are several reasons to cancel projects related to CBDCs. This is because Danish central banks note potential difficulties for the private sector, questionable values and benefits, and other issues.

However, until now no central bank has set aside the possibility of fully launching a CBDC.