Japan is set to launch a pilot program in April to test the use of a digital yen, joining many countries exploring the possibility of issuing a central bank digital currency (CBDC). The Bank of Japan (BOJ) has been conducting experiments for the past two years to decide if a CBDC is viable.
BOJ To Simulate Transactions in Test Environment
Under the pilot program, the BOJ will conduct simulated transactions with private financial institutions in a test environment, according to BOJ Executive Director Shinichi Uchida. The program is meant to help the BOJ be prepared if the government decides to issue a digital yen.
Japan Seeks To Keep Pace With China in CBDC Race
Japan and other advanced economies are trying to catch up with China, which has taken the lead in the global race to develop CBDCs and has increased its pilot schemes for retail payments. The U.S. Federal Reserve is also exploring the possibility of launching a fully digital dollar, known as Fedcoin.