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BOJ Starts Central Bank Digital Currency Experiments
The year-long Phase 1 will conduct experiments on basic functions of a CBDC.
Updated Sep 14, 2021, 12:35 p.m. Published Apr 5, 2021, 9:58 a.m.
The Bank of Japan (BOJ) on Monday kicked off the first phase of experimenting with a central bank digital currency (CBDC), having made the necessary preparations in the first quarter.
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"In PoC Phase 1, the Bank plans to develop a test environment for the CBDC system and conduct experiments on the basic functions that are core to CBDC as a payment instrument such as issuance, distribution, and redemption," the BOJ said in an announcement on Monday.
The blockchain PoC, or proof of concept, is a demonstration of the real-world feasibility of the project idea.
BOJ's Phase 1 will run through March of next year, following which the central bank will make a detailed assessment of the CBDC's various functions, including the maximum amount of the currency a single entity can hold, as per Reuters.
Also read: Central Bank ‘Money Drops’ With Digital Currencies Could Fuel Inflation: Bank of America
Interest in CBDCs and contactless payments has grown in the wake of the coronavirus pandemic and its requirement to avoid physical contact.
A survey conducted by the Bank for International Settlements this year showed 86% of central banks are actively researching the potential for CBDCs, 60% are experimenting with the technology, and 14% are deploying pilot projects.
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