skip to Main Content

Japan Digital Yen 2023: Trial Launch

Digital Japan Yen

The Bank of Japan (BOJ) will pilot test its digital yen in spring 2023. 

Digital Japan Yen –  Confirmed Trial

In a Nikkei report published on Nov. 23, the Japanese central bank formed a collaboration with three megabanks and regional banks. This pilot program will help the BOJ determine if the central bank digital currency (CBDC) will suit the economic environment of Japan. 

The experiment will take place over a span of two years. Aside from the major banks that they partnered with,  a number of regional financial agencies will also participate in the trial run. It will end in 2026. Then, the central bank will decide if they will approve its official use. 

Digital Japan Yen Pilot Testing Goals

Some of the things that the Bank of Japan will check during the pilot test are technical interruptions and complications in legalities. Most importantly, this experiment will check the reliability and durability of digital yen under unfavorable circumstances. These undesirable factors include loss of internet connection and malicious attacks by hackers

The two-year pilot program will run its course in partnership with commercial banks. BOJ’S statement reveals their target as: 

“From the spring of 2023, we will cooperate with private banks and other organizations to verify whether there are any problems with deposits and withdrawals in bank accounts.”“[The experiment will] check whether it can operate even in an environment where the Internet does not reach.”

What is Central Bank Digital Currency (CBDC)?

Japan Digital Yen

CBDC stands for central bank digital currency. It is a central bank-issued digital money. Thus, CBDCs are widely available for public usage. Also, it represents the legal tender of a certain country. 

Here are some things to remember about the central bank digital currency:

First, it is the digital form of traditional money.

Second, a country’s central bank issues and authorizes it.

Third, that certain country’s monetary policies and economic conditions influence a CBDC’s supply and value. 

Lastly, it follows the principle of digital ledger but there is a possibility that it will not anchor its operations on the blockchain or distributed ledger technology. 

Worldwide Central Bank Digital Currency (CBDC) Sentiment

There is increasing interest in using CBDC for cross-border payments. The Bank for International Settlements (BIS) pioneered experiments on the digitized traditional currencies with the participation of Hong Kong, Thailand, United Arab Emirates, and China. 

BIS’ mCBDC pilot testing with these countries yielded a transaction volume of more than 20 million in a span of six weeks. 

The Bank for International Settlements (BIS) is holding another set of experiments with Singapore, Israel and Norway with the aim of enhancing cross-border transactions. 

The Future of Digital Yen

Last year, BOJ conducted an internal test to check what basic functions a digital currency requires including circulation and issuance. The Spring 2023 pilot testing leans towards testing the possibility of real life usage of the digital yen. 

Nikkei’s November 2023 report did not name the megabanks. Although reportedly, they are Mizuho Financial Group Inc., Mitsubishi UFJ Financial Group Inc., and Sumitomo Mitsui Financial Group Inc.

Final Word

The digital yen is the newest member of the many centralized digital currencies that have been created. In particular, China released it digital yuan in April 2021. Correspondingly, Tencent started accepting payments of digital yuan on April 7, 2022.

On the other hand, the Federal Reserve of New York commenced their pilot testing of the digital dollar with nine financial institutions. The participants include Wells Fargo, Citibank, and Mastercard. Their CBDC experiment will determine the digital dollar’s feasibility when used in a distributed ledger technology.

The results of digital yen can propel forward Japan’s progress in cashless transactions. If it proves to be usable in different kinds of environments and for various purchasing reasons, the Japanese public may accept it as Japan’s digital currency.

Hi! I am Tracie, an Education major with an interest in Finance and Investing. Come and explore the crypto world with me! :)

This Post Has 0 Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

The maximum upload file size: 1 MB. You can upload: image. Links to YouTube, Facebook, Twitter and other services inserted in the comment text will be automatically embedded. Drop file here

Back To Top