Japan’s central bank has launched a proof of concept for its central bank digital currency, or CBDC, according to an official Announcement on Monday.
After initial preparations to test the technical feasibility of CBDC core functions and features in early 2021, the Bank of Japan will begin its first phase of CBDC testing today. During this phase, the bank plans to develop a test environment for the CBDC system and conduct experiments with basic functions related to payment, issuance, distribution and redemption of a CBDC.
According to the announcement, this phase is expected to be completed by March 2022.
The BoJ originally announced his plans to initiate CBDC testing in October 2021. The bank stressed that although it “has no plan to issue CBDC” from the standpoint of ensuring the stability and efficiency of the overall payment and settlement systems, it is still important to prepare for “changes in circumstances in an appropriate manner.”
According to the original roadmap of the CBDC experiment, the bank has expected start a pilot CBDC program with payment service providers and end users upon completion of the second testing phase. This phase will implement additional CBDC functions in the test environment developed in the first phase and determine its feasibility.
The BoJ recently announced its founding of the Liaison and Coordination Committee to collaborate with both the private sector on the upcoming CBDC pilots.