After China’s launch of its digital Yuan, Japan’s central bank has begun its feasibility experiment on digital currency. The experiments commenced on Monday, the 5th of April. This announcement was made in line with the progressive movement of other central banks around the world towards the ever-growing market.
Japan is at the forefront of embracing, controlling, and legalizing cryptocurrency in today’s world due to its strong technical roots. It was one of the first countries to accept cryptocurrency as a legal tender and to use it as a means of exchange with its citizens. Cryptocurrency mining has a clear connection to Japan’s history. Currently, nearly 3 million people use and exchange cryptocurrency in the country.
Three Testing Phases
The experiment is divided into three stages, according to a statement issued by the BOJ in October 2020. The first set of tests will look into the supply, distribution, and retrieval of a personalized central bank digital currency (CBDC). The second phase of experiments will focus on evaluating designated functions in relation to the maximum amount of information an object. The third step will be a test run for financial service providers and customers.
The need for a regulated payment network has been linked to the rising interest in CBDC. Shinichi Ushida, the executive director of the central bank, states that the bank has no plans to issue the currency to the general public at this time. On the other hand, the bank is committed to seeing the project through to completion in accordance with international standards. He affirms that given the current factors at play, including technological advancements in payment, CBDC has a fair chance of providing a means of payments and settlements, and such systems could become a global norm.
In April 2017, Japan made cryptocurrency legal as a form of payment. Over 20 licensed crypto exchange operators operate throughout the country. In 2018, SBI opened Japan’s first bank-backed cryptocurrency exchange. Cryptocurrency exchange regulations in Japan can be fairly described as progressive. The demand for cryptocurrency is currently on the rise, and the praiseworthy attempts of central banks around the world to rise to the demand might yet be the panacea to global economic maladies.