The Bank of Japan (BOJ) has begun experiments to analyse the viability of digital currencies in the country. The bank therefore joins the lists of other banks that are exploring the benefits that digital currency has. The Bank of Japan’s experiment is aimed at rising up to scale with the progress that private companies have achieved in this aspect.
The Bank made it known through a statement it put out that the first phase of its digital currency experiment will take place from 5th of April and end in March 2022. This phase will focus on testing the technical aspect involved in issuing, distributing and using the Central Bank Digital Currency (CBDC) for day-to-day activities. After this stage has successfully been completed, the bank will then move to the next stage of the experiment. The next stage will comprise of activities that will meticulously examine more detailed functions such as whether to set limits on the amount of Central Bank Digital Currency (CBDC) each entity can hold.
The Central Bank of Japan also made it known that it will, if necessary, launch a pilot program that will involve payment services providers and end users. This information was provided last month by the Bank of Japan’s Executive Director; Shinichi Uchida. The executive also told a committee of policymakers and bank lobbies looking into Central Bank Digital Currency (CBDC) that “while there is no change in the Bank of Japan’s stance it currently has no plan to issue CBDC, we believe initiating experiments at this stage is a necessary step”.
Cryptocurrency came into the world with such force and has become one to reckon with. The threats that come with cryptocurrency has made Central Banks across the world to start considering developing their own digital currencies. Central Banks across the world are looking modernizing their financial systems so that they are not left out and eventually become obsolete, as cryptocurrency has the ability to render other financial systems obsolete with time and if there are no improvements.
Currently China is at the forefront of digital currency matters and while other countries are still looking at how they can integrate it into their systems, China is already looking at experimenting on operating its own digital currency.