Bank of Japan to launch its CBDC pilot in April, following…
- The Bank of Japan plans to launch its CBDC pilot in April 2023.
- The pilot project will commence after the proof-of-concept testing is completed.
In his opening remarks at the Fifth Meeting of the Liaison and Coordination Committee on Central Bank Digital Currency on 17 February, the Bank of Japan’s (BOJ) executive director, Shinichi Uchida, revealed that the CBDC pilot project will commence on April 2023. The pilot will start once the Proof of Concept (PoC) Phase 1 and 2 are concluded.
CBDC pilot to start after proof of concept
In PoC Phase 1, which started in April 2021, the central bank focused on basic CBDC transactions, such as issuance, payout, and transfer. The PoC Phase 2 started in April 2022, where the bank implemented more complex functions. Moreover, it confirmed that the CBDC system’s processing performance could be maintained.
The next step for the Japanese central bank is to launch the pilot program in April 2023 to test the technical feasibility that wasn’t fully covered by the PoCs and to utilize private businesses’ skills and insights to design a CBDC ecosystem.
The pilot program will revolve around developing an experimental system for an integrated end-to-end process flow. Additionally, it will test measures and potential challenges for connecting the experimental system with external ones.
The BOJ hopes that the pilot program will lead to improved designs through discussion with private businesses. The topics currently on the agenda include alternative data models and architectures for offline payments, the optimal design of the CBDC system in providing value-added services, and challenges and technologies or functions that could become necessary where a touchpoint with users arises.
The central bank’s executive director stated:
“Alongside this, our continued dialogue on CBDC and the future payments landscape thus far will enter a new phase. Continuing to draw on your experiences and insights, we are determined to design a CBDC that would be acceptable to both society at large and end users.”
The BOJ also plans to establish a CBDC Forum. Moreover, it will invite private businesses engaged in retail payments or related technologies to participate. The bank will launch experiments with narrowed objectives and gradually expand its experiments in a phased and planned manner.