Information from the Bank of Japan (BOJ) said, April 2023 Japan will launch a pilot program to test the use of the digital yen.
The Digital Yen is a central bank digital currency that will allow the public to access state funds in the form of cryptocurrencies.
Japan's 3 major banks "shake hands" to test digital yen
Japan's three major banks, Mizuho, Mitsubishi UFJ and Mitsui Sumitomo are considering coordinating with local banks to test a digital yen issued by the Bank of Japan (BoJ) from 2023.
Under this two-year central bank digital currency (CBDC) pilot program, the BOJ will partner with private banks to test deposits and withdrawals from accounts and test them. see if this virtual currency can work well without internet in case of emergency.
A CBDC can offer more convenience than cashless payment methods being offered in the private sector currently. While customer credit card payments take up to 1 month to reach merchant accounts, CBDCs can be transferred instantly – even after business hours or on weekends. This promises to help reduce transaction costs.
And unlike current forms of cryptocurrencies that are being rolled out in a limited number of shops and transportation providers in Japan, the Digital Yen can be used anywhere.
Cash is circulated with an equivalent level of convenience. This will likely encourage more merchants to accept cashless payments – a point where Japan is trailing other developed countries.
China, a pioneer in this field, has entered the experimental phase of digital yuan trading in fact, the European Central Bank (ECB) has begun to study digital currency.
2 years, and the US, which is cautious about issuing digital currencies, also established a new inter-agency mechanism in September 2022 to verify related issues.
The digital currency is rated for high convenience, but it is also criticized for its management, security, liquidity, risk of money laundering and use in operations. illegal action.
Digital Yen enters final testing phase
Phase 3 - the final testing phase, the Bank of Japan (BOJ) will evaluate issues related to deposits, withdrawals and the ability to operate in the event of a disaster or without the Internet.
Previously, the Bank of Japan also implemented phase 1 in April 2021 and phase 2 from April 2022, confirming the basic functions of the digital yen such as issuing, distributing as well as the amount of money an individual can hold or trade.
Phase 3 of the digital yen trial is expected to last for several years, with the participation of private businesses and financial institutions and banks.
Currently, Japan does not have a specific plan to issue a digital yen but these testing phases are to prepare for the change of the financial environment in the future.
Not only in Japan, digital currency is being researched and tested by many central banks to be used as paper money and coins in circulation.
According to a survey by the Bank for International Settlements (BIS), 90% of the world's central banks are researching and testing digital currencies.
In China, the digital renminbi is being piloted in cities like Beijing, Shanghai, Shenzhen, etc. The European Central Bank is also expected to make a decision on the introduction of the coin. digital currency this year.
If you want to implement digital currency in practice, experts say that there needs to be more in-depth assessment of management ability, security, liquidity or anti-use control mechanism in illegal activities. However, with the habit of using cash, the digital Yen is not likely to be accepted by Japanese people.