Japan's digital yen to begin testing in April, official launch not in sight for now

In the final quarter of last year, China completed a six-week test run of its digital currency known as e-CNY, which was issued by the country's central bank. Back in early March 2022, a first step towards a similar digital currency took place in the US, where President Biden signed an executive order that highlighted the need to put "the highest urgency on research and development efforts into the potential design and deployment options of a United States CBDC." Now, Japan is announcing the first test run of its central bank digital currency.

Earlier today, Japan's central bank revealed the aforementioned plan, which comes after no less than two years of experiments conducted to decide on the viability of such an undertaking. According to Bank of Japan Executive Director Shinichi Uchida, who spoke to private-sector executives, "Our hope is that the pilot program will lead to improved designs through discussion with private businesses."

While BOJ is planning to conduct simulated transactions which will also involve private entities, this will not be a short test as China's. BOJ's head of CBDC development, Kazushige Kamiyama, said that the test run will involve commercial banks alongside non-bank settlement firms and carriers. He also added that the process will last for a few years and tests on transactions among consumers and retailers are not planned yet.

In the end, the purpose of the whole test (PDF overview of the program) is to help Japan's central banking authority to be ready for the day when the government will decide to issue a digital yen.

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