Bank of Japan (BoJ) To Initiate A Controlled Experiment With CBDC

Priyanka Kulkarni
Priyanka Kulkarni, post-graduated in Business Administration holds worthy experience in market research and investment banking. She is passionate to flaunt her perception towards cryptocurrencies.
  • The central Bank of Japan (BoJ) is initiating a controlled experiment with CBDC to check the technical feasibility.
  • However, with the introduction of CBDC BoJ has to face two chief hurdles that are universal access and resilience.
  • BoJ also stated that it will start a Proof-of-Concept (PoC).

With the Central Bank Digital Currency (CBDC) getting popular in the Asian countries. The Central Bank of Japan (BoJ) is initiating a controlled experiment with CBDC to check the technical feasibilities.

Bank will check the feasibility of CBDC from a technical viewpoint

As per reports, the bank stated that it will check the feasibility of CBDC from a technical viewpoint, collaborate with other central banks and related organizations, and will consider launching a CBDC. BoJ also stated that it will start a Proof-of-Concept (PoC) and wish to test the digital yen in a controlled manner before taking decisions.

Moreover, sources reveal that the BoJ has not changed its position that it has not planned to issue CBDC now. The bank is expected to work with private financial organizations and payments companies to tackle technical issues.

In February 2020, news came out that the central banks of prominent countries such as Britain, Japan Canada, Switzerland, and Sweden are planning to collaborate on exploring the issuance of digital currencies.

BoJ to face certain hurdles while introducing CBDC

However, with the introduction of CBDC BoJ has to face two chief hurdles that are universal access and resilience. In order to have universal access, all users need to have smartphones, but in Japan only 65% of Japanese citizens use smartphones.

For resilience, the bank has to ensure that the citizens can use digital yen even when they are offline. As in the case of an emergency, the use of digital yen would become useless.

Despite the country looking to adopt cryptocurrency, there are still many citizens that conduct their majority of transactions through cash.

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