- Japan has been conducting proof-of-concept (PoC) experiments on its CBDC for the last two years.
- The Japan central bank now says that the project is now set for a pilot program.
- Currently, China’s digital Yuan continues to lead the CBDC race globally.
After two years of testing the digital yen, the Bank of Japan (BOJ) on Friday said it would launch a pilot programme for the central bank digital currency (CBDC) in April.
A press release by the BOJ stated:
“Taking into account the results and findings of the PoCs along with our discussions to date, the Bank, as a next step, has decided to launch a pilot program this April.”
Proof-of-concept testing
The announcement comes after two phases of PoC testing. The first POC testing phase started in April 2021 and it involved the BOJ building a huge experimental environment around a CBDC ledger that would form the foundation for the project. The ledger confirmed CBDC transactions that include its issuance, transfer and payouts.
The second POC testing phase started in April 2022. At this stage, the BOJ implemented additional functions to the core functions of the CBDC that had been explored in Phase 1. It also investigated the CBDC’s feasibility and processing performance. This phase is expected to run until March and the results are already promising according to the bank.
The aim of the pilot project
According to the BOJ, the aim of the digital yen pilot programme is first to test its technical feasibility which was not possible with the POC testing phases and second to use the insights and skills of private businesses in operating and designing a CBDC ecosystem for social implementation.
If the pilot program was to be a success, Japan will join China whose digital Yuan currently leads the CBDC race globally.