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Business

Japan’s Central Bank Begins Experiments On Issuing Digital Currency

Oluwaseye Ogunsanya April 5, 2021 5


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The Bank of Japan (BOJ) has kicked off experiments on Monday to study the feasibility of issuing its own digital currency, joining efforts by other central banks aiming to match the innovation in the field achieved by the private sector.

According to the bank in a statement, the first phase of experiments will focus on testing the technical feasibility of issuing, distributing and redeeming a central bank digital currency (CBDC), it would be carried out until March 2022.

Thereafter, the BOJ will move to the second phase of experiments which will scrutinise more detailed functions, such as whether to set limits on the amount of CBDC each entity can hold.

If necessary, the central bank will launch a pilot programme involving payment service providers and end users, BOJ Executive Director Shinichi Uchida said last month.

“While there is no change in the BOJ’s stance it currently has no plan to issue CBDC, we believe initiating experiments at this stage is a necessary step,” Uchida told a committee of policymakers and bank lobbies looking into CBDC.

Global central banks are looking at developing digital currencies to modernise their financial systems, ward off the threat from cryptocurrencies and speed up domestic and international payments.

While China leads the pack, the BOJ has been speeding up efforts to catch up with a plan announced in October to start experimenting on how to operate its own digital currency.

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