Japan is stepping up its pace on its own digital central bank currency (CBDCs) and announces the launch of a pilot project for its digital yen in April 2023. More and more countries are racing to catch up with China, whose digital yuan is already in use in some parts of the territory and benefit of advantages of crypto technologies.
The digital yen in test in Japan
Japan announced the launch of a pilot program in April 2023 to test its future central bank digital currency (CBDC). The information was confirmed by the executive director of the Bank of Japan (BoJ), Shinichi Uchida.
In a talk focusing on the future of central bank digital currencies, Uchida said:
“The objective of the pilot program is twofold: first, to test the technical feasibility…and second, to use the skills and knowledge of private companies in terms of technology and operation to design a CBDC ecosystem in the event of a social implementation.”
This initiative follows two years of experimentation and discussions between the Bank of Japan, the government and Japanese policymakers on the need for the issuance of a central bank digital currency. But above all, this comes after a reshuffle of BoJ stakeholders: Kazuo Ueda, rather pro-innovation, will soon succeed Haruhiko Kuroda as director and Shinichi Uchida will soon be appointed governor.
For now, the digital yen will not affect Japanese individuals or merchants. Only private financial institutions will have the opportunity to participate in this new test environment.
Furthermore, the objective of the program is to ensure that the Bank of Japan be ready to develop and put into circulation the digital yenin the event that the Japanese government were to decide so.
“If a CBDC were to be issued in the future, exploring its framework in such an incremental manner and engaging in very transparent communication with the private sector are necessary steps to take for its adoption in society.”
Countries accelerate on CBDCs
Japan, like many other countries, is trying to catch up with China. The country is at the forefront of the global race to develop CBDCs with its digital yuan.
In order to accelerate the adoption with the population and to motivate the Chinese to exploit this vector of payment, several major cities in the country have airdropped e-CNY. In total, these operations represent 180 million yuan, or about $26.55 million.
In 2022, the United States proposed a bill to ban the digital yuan in mobile apps. The objective was to fight against espionage attempts on the part of China, further proving MNBC could be used for population surveillance purposes.
For its part, the American Federal Reserve (FED) has also studied the way in which it could launch a fully digital dollar, which some have ironically called Fedcoin. Fed leaders said any launch of such an asset would require the support of the country’s leaders, but remains in the plans.
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