Bank of Japan to Begin Digital Currency Experiment in 2021
(19 October 2020 – Japan) The Bank of Japan (BOJ) announced it will begin early phase experiments next year on issuing a digital currency in order to be ready should demand for one rise quickly.
This involves creating a system on the internet, where the basic functions of the central bank digital currency (CBDC), including its issuance and circulation, will be tested. BOJ will then work on more advanced experiments.
The test will be held in three stages. The final stage of the test will involve private businesses and consumers to examine the feasibility and safety of the digital currency as a method of payment on par with cash.
“From the viewpoint of ensuring the stability and efficiency of the overall payment and settlement systems, the bank considers it important to prepare thoroughly to respond to changes in circumstances in an appropriate manner,” the BOJ said in a report.
Although the BOJ has said that it has no plans to issue a CBDC, it will step up preparations in response to moves by China, which is ahead of other countries in the field, and Prime Minister Yoshihide Suga's policy focus on digitalisation.
Chief cabinet secretary Katsunobu Kato repeated the BOJ line that the bank has no plans now to issue a digital currency, but he said: “the issue is necessary to consider.”