Nicholas Howard
The Bank completed its proof-of-concept testing which began in 2021 and will initiate a pilot program for the use of digital yen in April.
Japan, with its existing ban on foreign stablecoins such as Tether, intends to start a trial of its central bank digital currency (CBDC) in April 2023. This trial aims to include private businesses, testing a CBDC-oriented ecosystem.
On the 17th of February, Shinichi Uchida, the executive director at the Bank of Japan (BoJ), announced at a CBDC committee meeting that the Bank made a decision to begin a trial version of the digital yen starting in April following the conclusion of their proof-of-concept assessment which commenced in 2021.
The pilot phase of the experiment will further explore the technical capabilities of digital yen and explore what an ecosystem with a CBDC could be like, using the involvement of private businesses. It should be noted that the testing won't involve any real, retail transactions. They will be simulated.
In the address, Uchida discussed the development of a CBDC and the necessity of collaborating with the private sector to establish viable data patterns, build an offline payment procedure, and establish other significant components of the system. Consequently, a CBDC forum will be fashioned to facilitate the necessary consultation.
The public was eager for information about the central bank digital currency pilot after media outlets reported in November 2022 that the Bank of Japan planned to launch the program. It was reported that at least three of Japan's largest banks and regional banks would be working together with the BoJ.
Japanese authorities are contemplating removing the restriction on foreign stablecoins that was imposed in 2022. The Financial Services Agency of Japan expects the changes to be in place by June 2023, however this does not mean that all foreign stablecoins will immediately be approved for use. A thorough review process must be completed for each specific stablecoin prior to being accepted.