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.
The Bank of Japan believes that there’s a possibility of a surge in public demand for a CBDC, considering the rapid development of technological innovation.
Bank of Japan has been experimenting with a central bank digital currency, although it is yet to officially develop a digital currency.
Japan’s interest in a digital yen went up a notch after the government included it in its official economic plan. Japan has also been doing extensive research.
The Bank of Japan has been exploring the technical feasibility of a CBDC and in its latest paper; it dives into offline usage for those without smartphones.