The central bank stated that the pilot would be conducted with a trio of mega banks and regional banks with a keen focus on the issuance and withdrawals of the state-backed digital currency.
In collaboration with France's IDEMIA and Malaysia's Softspace, the Bank of Japan will pilot a project in preparation for the full-scale CBDC launch, beginning with a touch payment infrastructure.
The BOJ completed the first phase, which started in April last year, in which it focused on the basic functions of a CBDC, such as issuing and distribution.
Japan’s central bank will uphold simplicity in its design of a CBDC, with a senior official saying this is key in making it interoperable with payment systems.
A senior executive at the Bank of Japan has said China’s forthcoming digital currency does not pose a threat to the status of the U.S. dollar as the global reserve currency.
The central bank of Japan has started the first phase of a feasibility study with a goal of testing the CBDC’s basic functions including issuance, distribution and redemption.
The Liaison and Coordination Committee will focus on facilitating smooth implementation of the proof of concept for the central bank digital currency.
Bank of Japan Governor Haruhiko Kuroda stressed the need for Japan to prepare thoroughly for a time in which it may need to issue a digital yen.
The Bank of Japan is reportedly conducting research on a digital yen as it aims to keep up pace with neighboring China.
Hiromi Yamaoka, the former head of payment and settlement systems at the central bank, said the Bank of Japan still has some distance to go before it can launch a digital currency.
The Japanese central bank is closely monitoring regional and global counterparts in their progress on CBDCs, according to Kazushige Kamiyama.