The Bank of Japan will reportedly begin testing the use of a digital yen in April this year. The agency has previously said it could use Sweden as a model for launching a CBDC.
According to CNBC, the test phase involved conducting simulated transactions with private financial firms. Consumers and retailers will be excluded from the experiment, said Shinichi Uchida, executive director at the Bank of Japan.
“Our hope is that the pilot program will lead to improved designs through discussion with private businesses. “he stated
The test is intended to prepare the Bank of Japan in the event that the local government issues a digital version of its national currency. Uchida believes such financial products should be shown to the private sector before they go live.
The central bank pledged a year ago that it would approach CBDCs with caution and ensure their compatibility with the domestic monetary ecosystem. It has also vowed to follow the lead of Sweden rather than China. Sweden ran experiments to see how the digital crown would fit into its financial network and if it could boost cross-border payments.
China, on the other hand, has launched an aggressive campaign to promote its e-yuan. Local authorities distributed millions of dollars worth of products to residents of the capital Beijing, Chengdu, Shenzhen and other cities. They also allowed the digital yuan to be used during last year’s Beijing Winter Olympics.
Exchanges Leaving Japan Due to New Policies
The Japanese government recently passed a bill that would remove the 30% corporate tax on cryptocurrency issuers from their holdings. Despite the less strict rules, some leading exchanges like Kraken and Coinbase have indicated that they will leave the local ecosystem.
The former cited the unfavorable conditions in the Japanese market and the decline of the cryptocurrency industry as the main reasons. Coinbase soon followed for similar reasons. Local users have until February 16 to withdraw funds from the platform.
However, Binance applied for permission to re-enter Japan last September. In November, it increased its presence in the region with the acquisition of Sakura Exchange BitCoin (SEBC).