The Bank of Japan (BoJ) has planned experiments on a digital yen with three megabanks and regional banks in the country, Nikkei reported on Wednesday.
Starting in the spring of 2023, the BoJ will work with private banks and other organizations to identify any problems with deposits and withdrawals, and check that a central bank digital currency (CBDC) can operate during natural disasters and in areas without internet access, according to the report.
Although the report did not name the banks, Japan's “three megabanks” typically refer to Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc.
The BoJ joined a growing list of central banks worldwide exploring CBDCs last year, by developing a test environment for a digital yen and exploring basic functions like issuance, distribution and redemption.
Last year, a BoJ official said that it is the central bank's priority to ensure a CBDC enables competition between private payment providers and be universally accessible by the public.
The experiment will last two years and the central bank will decide on issuing a CBDC in 2026, the report said.
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