The Bank of Japan to launch its CBDC pilot before May

Japan, a nation where foreign stablecoins like USDT are prohibited, plans to begin its central bank digital currency (CBDC) pilot in April 2023. It will aim to include private businesses and test an ecosystem. 

On Feb. 17 the Bank of Japan (BoJ) released the opening speech of its executive director Shinichi Uchida at the CBDC committee meeting. In it, Uchida announces that the Bank decided to launch a pilot program for “digital yen” in April, after finishing its Proof of Concept testing, that has begun in 2021.

The pilot test will continue the work on the technical feasibility of “digital yen” and extend the experiment to the modeling of a CBDC ecosystem with the participation of private companies. As the official specifies, no actual retail transactions will be made during the pilot, only the simulated ones.

Uchida’s speech focuses on the design of the future CBDC and the need to consult with the private sector on alternative data models, architectures for offline payments and other vital elements of the system. For this kind of consultation, the CBDC forum will be created.

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The news about the CBDC pilot was highly anticipated, as the local media reported about the BoJ’s intention back in November 2022. From these reports, it is known that at least three Japanese megabanks and regional banks will collaborate with the BoJ.

Meanwhile, Japanese authorities also consider lifting the ban on foreign stablecoins, which came into law in 2022. According to the Financial Services Agency (FSA) of Japan, the amendments should be passed by June 2023. While they won’t let any foreign stablecoin into the market automatically, the green light will be shown to those coins, which successfully passed individual checks.