Japan will start a pilot programme to test the use of a digital yen in April, joining a growing number of countries seeking to launch their own central bank digital currencies (CBDC), the Japan central bank announced last Friday.
The long-anticipated move follows two years of experiments that the Bank of Japan (BOJ) has been conducting to decide on issuing a CBDC and to move Japan closer to issuing a digital yen in the next several years.
In the pilot program, the Bank will develop a system for experiments, and conduct simulated transactions with private entities in the test environment. The programme will help the BOJ be ready in case the government decides to issue a digital yen.
With China at the top of the global race to develop CBDCs, Japan and other advanced economies are now seeking to catch up and have ramped up pilot schemes for retail payments.
According to Reuters, the US Federal Reserve has also been exploring how it can launch a fully digital dollar that some have referred to as Fedcoin. The Group of Seven (G7) advanced economies have also reportedly sought to align themselves in their progress towards issuing CBDCs.