Bank of Japan Plans to Rope-In Other Major Lenders in Digital Yen CBDC Trials: Report

Japan could see a wider roll out of its digital yen by 2026. Before that, the BoJ aims to check if the CBDC works efficiently under disaster-like situations or no net connectivity.

Written by Radhika Parashar, Edited by Siddharth Suvarna | Updated: 24 November 2022 13:13 IST

Bank of Japan Plans to Rope-In Other Major Lenders in Digital Yen CBDC Trials: Report

Photo Credit: Unsplash/ Roméo A

This trial with the Japanese mega banks could go for as long as two years

Highlights

Japan is among other nations working on their respective CBDCs
Japan’s prime minister, Fumio Kashida is pro-blockchain
Japan aims to align its CBDC with existing financial institutions

Japan is accelerating its efforts to explore the potential of the overall blockchain sector. Moving forward on its CBDC plans, the Bank of Japan (BoJ) is looking to rope-in a bunch of other mega banks to test the digital yen. The three Japanese megabanks, while unnamed officially, are reportedly supposed to be Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui Financial Group Inc., and Mizuho Financial Group Inc. Starting next year, these banks will help the BoJ verify if there are any issues with the deposits and withdrawals of the CBDC.

Japan could see a wider roll out of its digital yen by 2026. Prior to that, the BoJ aims to check if the CBDC works efficiently under disaster-lie situation or no Internet connectivity, said a Nikkei report. This trial with the Japanese mega banks could go on for as long as two years.

A CBDC or a central bank digital currency is built on blockchain, works like cryptocurrencies, but are issued and regulated by the central bank.

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CBDCs are being designed by several nations around the world, with the aim of complementing, rather than replacing, current forms of money and provide an additional payment avenue to users.

As part of its research on CBDC, Japan's main aim is to ensure that it aligns properly with the country's existing financial and economic infrastructure. As per Kazushige Kamiyama, the head of BOJ's payments department has revealed that Japan's CBDC will soon enter a small-scale pilot test.

Japan's prime minister, Fumio Kashida has been on a hunt to find ‘new capitalism' solutions to boost the country's economy. The lawmakers of the country are not shying away from trying out crypto services to eradicate financial inequality in the country.

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Back in May, Kishida had said that Japan would develop and foster a promotional environment for Web3, blockchain, NFTs, and the metaverse.

Meanwhile, India, Russia, Jamaica, and China are working on their respective CBDCs.

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Further reading: Cryptocurrency, Bank of Japan, CBDC, Digital Yen

Radhika Parashar

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Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More