The Bank of Japan (BOJ) has officially launched the first phase of its proof-of-concept program for a central bank digital currency, or CBDC. The announcement, which was released on Monday April 5th, is available here.
The first test phase, in which “the technical feasibility of the core functions and features required for CBDC is tested”, will continue until March 2022. At this stage, the Japanese central bank will begin developing a test environment for CBDC. The environment is used to conduct experiments based on “the basic functions of CBDC as a payment instrument such as issue, distribution and redemption”.
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Has the BOJ come any closer to releasing a CBDC? Not necessarily: Shinichi Uchida, Executive Director of the BOJ, said in a press conference last month: “Although the BOJ’s stance is not changing, there are currently no plans to issue CBDC. However, we believe that experiments will begin at this stage necessary step. “
“Although the BOJ’s stance remains unchanged, there are currently no plans to issue CBDC. However, we believe that initiating experiments at this stage is a necessary step.”
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End-users and third-party payment providers will not be introduced to the trial program until the second phase of testing has been completed.
The BOJ had originally announced that it would start a CBDC test program in October 2021. At the time, the bank stated that while it had no plans to issue a CBDC, the issue was important to investigate. Citing CoinTelegraph, the bank stated: “From the point of view of ensuring the stability and efficiency of the entire payment and settlement systems, it is still important to adequately prepare for changes in circumstances.”
According to the announcement, end users and third party payment providers will not be introduced to the trial program until the second phase of testing has been completed. There is no expected schedule for the completion of Phase 2 yet.
Finance Magnates previously reported that the Bank of Japan first expressed interest in a CBDC in July 2020. At that point, the bank announced that it would be a check[ing] the feasibility of CBDC from a technical perspective, collaborate[ing] with other central banks and relevant institutions and examine[ing] Introduction of a CBDC. “
In addition, the bank said it saw two major hurdles to adoption at this point: universal access and resilience.