Cryptocurrencies – FinanceBrokerage
Bank of Japan, central bank digital currency and a new era
Central banks are ready to learn more about the Central Bank’s Digital Currencies (CBDC) and the Bank of Japan is ready to join the process. This week the country’s central bank made an important announcement. The Bank of Japan began the first part of the central bank’s digital currency experiments. The aim of phase 1 is to test the basic functions of CBDC as a payment instrument such as issuance, distribution and redemption. This part of the experiment ends in 2022.
The country’s central bank will then move on to phase 2. In this phase, more detailed functions of the CBDC are to be tested. If necessary, the Bank of Japan is ready to proceed to phase 3. Private companies and end-users will participate in phase 3, which is organized through experiments with central bank digital currencies.
Currently, the central bank has no intention of issuing a central bank digital currency. However, she wants to stay prepared if a need arises in the future. Bank of Japan Executive Director Shinichi Uchida said that initiating experiments at this stage is a necessary step.
The country’s central bank wants to learn more about the CBDC and is not the only bank ready to collect more information. Central banks around the world are trying to develop digital currencies. Currently, China is the main player as it is close to adopting the digital yuan. The country has been grappling with this issue for more than six years.
Central bank digital currency and state banks
The Chinese authorities understand the importance of this issue. The main Chinese state-owned banks opened their doors to applications from customers who want to access digital yuan wallets in Shanghai and Beijing. China has the potential to become a leader when it comes to CBDC.
Several state commercial banks in the country’s global financial hub now allow public users to request wallet reservations. The list of banks is pretty impressive and includes the Bank of China, among others. However, the country’s central bank reviews every application submitted by users.
There are other interesting projects too. Four major Chinese cities ran city-wide digital yuan giveaways to test the central bank’s digital currency. However, Shanghai has not yet carried out a city-wide giveaway. Despite this fact, many Shanghai shopping malls and even hospitals have already introduced support for the digital yuan as a payment method.
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