The Bank of Japan (BOJ) has announced the completion of the second stage of its CBDC (central bank digital currency) program and is now moving ahead with its pilot project.
Japan launched its pilot program on CBDCs in April.
CBDC Program To Go Ahead. The CBDC program's second stage has been finished by the Bank of Japan.
The bank published a report on the completion of the second phase of its study on central bank digital currency, which built on the first phase conducted in April 2021. The report stated that the second phase improved on the foundational ledger functions explored in the initial phase.
“We have launched in April 2023 and are proceeding with the pilot program. In the pilot program, the end-to-end process flow will be tested, the measures and potential challenges for connection with external systems will be explored, and considerations and solutions indicated as necessary in the PoCs will also be explored.”
It also talked about establishing a CBDC forum to facilitate inputs from the private sector.
“Further, a CBDC Forum will be established with a view to proceeding with institutional arrangements for CBDC in an appropriate manner, and ideas and insights set out by private businesses related to retail payments will be drawn upon to deepen the study.”
The Orchestration System
The Bank of Japan has completed the second phase of its Proof of Concept for a central bank digital currency (CBDC). The focus was on establishing limits on CBDC holdings to ensure long-term financial stability, as well as user-friendly procedures for payments and technological advantages in ledger designs and database languages. The experiment involved 100,000 users and five intermediaries, testing transactions ranging from 500 to 3000 transactions per second. The Bank of Japan considers the Proof of Concept a success and plans to launch a CBDC pilot project. The CBDC program's second stage has been finished by the Bank of Japan.
Many Countries Exploring CBDCs
Countries around the world are exploring the possibility of creating a central bank digital currency, according to data from the Atlantic Council. The Atlantic Council tracks CBDCs in over 120 countries. 18 countries are in the pilot stage of launching a CBDC. These include India, China, and Japan. Another 11 countries have launched a CBDC, according to the council.
“In 2023, over 20 countries will take significant steps towards piloting a CBDC. Australia, Thailand, Brazil, India, South Korea, and Russia intend to continue or begin pilot testing in 2023. The ECB [European Central Bank] is also likely to start a pilot next year.”
Mixed Reactions In The United States
US lawmakers have mixed opinions on the issuance of a CBDC. Supporters believe it can improve financial services, while critics are concerned about privacy. A bill called the "Power of the Mint" has been introduced by Reps. Auchincloss and Hill to prevent the Federal Reserve from issuing a CBDC. Additionally, Sen. Cruz and Rep. Emmer have introduced bills to block the Fed from issuing CBDCs directly to individuals. The Fed has yet to decide on issuing a CBDC and would need congressional approval to do so.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.