Japan will launch a pilot program in April to test the use of its version of a central bank digital currency (CBDC) known as the digital yen, the central bank said on Friday.
"We plan to develop a system for experiments," Bank of Japan (BoJ) Executive Director Shinichi Uchida said in remarks during the fifth meeting of the BoJ Liaison and Coordination Committee on Central Bank Digital Currency.
"The aim of the pilot program is twofold: first, to test the technical feasibility ... and second, to utilize the skills and insights of private businesses in terms of technology and operation for designing a CBDC ecosystem in the possible event of social implementation," Uchida said.
The move comes after more than two years of proof-of-concept experiments by the BoJ around the digital yen, even as China's digital yuan continues to lead the CBDC race globally, which has extended to more than 105 countries representing over 95% of global GDP.
The move also comes at a time when the BoJ is set for leadership transition, with Kazuo Ueda expected to take over the top job from Haruhiko Kuroda when his second five-year term ends in April.
In November 2022, Nikkei reported that, starting in the spring of 2023, the BoJ would work on experiments on a digital yen with three mega-banks and regional banks in the country.
"At present, the pilot is not expected to see any actual transactions between retailers and consumers," the bank said. The central bank will establish a CBDC Forum and invite private businesses engaged in retail payments or in related technologies to participate.
CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.