The Bank of Japan asserted that it will begin to experiment with a central digital currency to check its feasibility from a technical perspective. The main motive behind the bank is to digitize cash.
However, it remains to be seen if Japan can reach the level China has achieved, which has already begun testing its own CBDC. This is the first time the BoJ has revealed it would commence a proof-of-concept process with the digital yen, but the bank is yet to reveal a timetable.
In a technical Hurdles for CBDC report, the bank stated it would “check the feasibility of CBDC from technical perspectives, collaborate with other central banks and relevant institutions, and consider introducing a CBDC.”
According to a development in February, the central banks of Britain, the eurozone, Japan, Canada, Sweden and Switzerland announced a plan to collaborate on researching issuing digital currencies.
In its report, the BoJ mentioned that there are two major technical hurdles: universal access and resilience.
Among the two, the former refers to providing accessibility to everyone, including those without a smartphone. Surprisingly, according to Nikkei, as of 2018, only 65% of Japanese people have smartphones. The BoJ said, “It is important to develop the CBDC to be available to a variety of users.”
“Resilience” refers to offline availability when electric power is down. The BoJ emphasized the importance of accessibility in any kind of environment, even in an emergency situation such as an earthquake.