In a significant development sees cryptocurrencies increasingly gaining traction, on Monday the Bank of Japan (BOJ) has started feasibility study of issuing its own digital currency, joining efforts by other central banks that are aiming to match the innovation in the field achieved by the private sector.
In a statement the BOJ said, during the first phase of experiments, which will continue upto March 2022, it will focus on testing the technical feasibility of issuing, distributing and redeeming a central bank digital currency (CBDC).
Thereafter, the BOJ will move to the second phase of experiments wherein it will dig into details, including whether to set limits on the amount of CBDC each entity can hold. If it is necessary, it will launch a pilot program which will include payment service providers and end users, said BOJ’s Executive Director Shinichi Uchida last month.
“While there is no change in the BOJ’s stance it currently has no plan to issue CBDC, we believe initiating experiments at this stage is a necessary step,” said Uchida to a committee of policymakers and bank lobbies looking into CBDC.
Globally, central banks are looking at developing their crypto currencies to modernize their financial systems, speed up domestic and international transfer of payments, among others benefits.
This development sees BOJ playing catch up.