Bank Of Japan To Test Technical Feasibility Of Digital Yen With Private Businesses

The Bank of Japan (BoJ) will launch a pilot program in April to test its central bank digital currency — the digital yen.

According to BoJ Executive Director Shinichi Uchida, the program aims to achieve two goals: "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."

The program will not involve actual transactions between retailers and consumers, but rather will focus on "experiments."

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A CBDC Forum will be established to allow private businesses engaged in retail payments or related technologies to participate.

The digital yen pilot program comes after two years of proof-of-concept experiments by the BoJ. Three megabanks and regional banks are expected to assist the initiative, beginning this spring.

The program also coincides with a leadership transition at the BoJ, with Kazuo Ueda expected to take over the top job from Haruhiko Kuroda, whose second five-year term ends in April.

As Ueda takes over, the BoJ will continue to explore the potential of a digital yen, with Uchida stating that the aim is to "develop the digital yen as a convenient and safe means of payment that can be used by anyone, anywhere, and at any time."

So far, China's digital yuan has been leading the global CBDC race.

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