• Japan’s central bank will begin its CBDC pilot program in April 2023, modeled after Sweden’s e-krona.
• The program will run parallel transactions with private financial companies, but customers and retailers won’t be involved.
• Japan is taking a more cautious approach than China, which has already conducted pilots for its digital yuan across several states.
Japan Launches Central Bank Digital Currency Pilot
Introduction
As blockchain technology and digital finance evolve around the world, central banks have started designing their own central bank digital currencies (CBDC). The latest report shows that the central bank of Japan will begin its CBDC pilot in April 2023.
Using Sweden as a Model
Previously, the central bank had announced it would employ Sweden’s e-krona as a model to launch its CBDC. Japan intends to catch up with China, which has already conducted pilots for its digital yuan across several states.
Less Aggressive Than China
The CNBC report noted that Japan would begin its CBDC testing phase by running parallel transactions with private financial companies. According to an executive director at the Bank of Japan, Shinichi Uchida, customers and retailers would not be part of the upcoming CBDC pilot. However, the executive noted that they hope to improve the CBDC design through the pilot program by exploring various transaction options with private businesses.
Preparing For Mass Adoption
As per the report, the central bank wants to prepare ahead if the local government issues a digital yen. In Uchida’s opinion, a digital currency should be tested in the private sector before presenting it to the public. The executive believes phased testing of the CBDC’s framework with the private sector would aid its mass adoption.
Conclusion
Last year, Japan said it would adopt a cautious approach in developing its CBDC to roll out a product compatible with domestic monetary system rather than following China’s steps. Sweden carried out various pilots to investigate compatibility of e-krona with country’s financial system while China employed more aggressive approach in development of e-CNY campaign by introducing it into system through promotional campaigns in several local governments
