Bank of Japan Resumes Effort to Launch a Sovereign Digital Currency

Bank of Japan Resumes Effort to Launch a Sovereign Digital Currency

The Bank of Japan (BoJ) officially announced that trials for its central bank digital currency (CBDC) are now live. The bank noted that the first phase of its trials should be completed by March 2022. According to a Reuters report, the trial will involve two phases.

The BoJ will focus its trial on the technical feasibility of the digital asset; how to issue, distribute, and redeem a central bank digital currency. The apex bank also noted that it would be concerting its efforts with other central banks to develop a product on par with the innovation already in the CBDC space.

In its second testing phase, the BoJ will focus on more specific product capabilities, like limits to determine the amount of CBDC each entity can handle at a given time.

The Executive Director of the Bank of Japan, Shinichi Uchida, noted that the financial institution has backed up its CBDC plan. He added that, should the need arise, the central bank will launch a pilot program involving payment service providers and end-users.

Uchida also noted that:

“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.”

It is worth mentioning that the BoJ, in late 2020, put its CBDC development program on hold because it lacked serious demand from citizens.

4 in 5 Central Banks Are Working on a CBDC
One of the preeminent goals of many central banks across the globe is to reduce the use of paper money in its jurisdiction. That said, several of the banks have embarked on journeys to develop and launch a sovereign central bank digital currency to promote cashless policies.

According to a 2020 report by the Bank of International Settlements, four in every five central banks (80%) have plans or have initiated actions to develop and launch a CBDC.

The People’s Bank of China (PBoC) is the leading institution in the race to develop a CBDC and is close to releasing the world’s first central bank-issued digital currency after several years of intense research and development.

 

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Bank of Russia Announces Plans to Launch a Beta CBDC Before the End of 2021

Bank of Russia Announces Plans to Launch a Beta CBDC Before the End of 2021

According to Prime News, the Bank of Russia has announced that it is working on launching a prototype of its central bank digital currency (CBDC) and start piloting as early as the end of 2021. The new information got disseminated by Alexey Zabotkin, the Deputy Chairman of the Bank of Russia, in an online event hosted by the Russian Economic School.

The prototype will give the public access to test the digital ruble, although real-time transactions will be restricted, for now.

Zabotkin noted that:

“Next year, based on this prototype, we will consider further developments and thereafter launch testing rounds.”

The Russian central bank first publicized its interests in pushing for a digital ruble in October last year. At the time, the official consultation paper described the digital ruble as an “additional form of money alongside cash and non-cash.”

Association of Russian Financial Institutions Raise Concerns About the CBDC Model
The national project faced some headwinds in January 2021 when the association of Russian banks and fintech companies highlighted the flaws in the proposed blockchain-based fiat model and raised issues about the likelihood of the cryptocurrencies getting used by fraudsters.

Nonetheless, 83 percent of the respondents on the consultation paper asserted that they were solidly behind the central bank’s plan to launch a CBDC.

Olga Skorobogatova, the Bank of Russia’s first Deputy Governor, noted sometime last month that the financial institution planned on proceeding with its proposed model to develop a digital ruble.

Meanwhile, major lenders of the country are getting ready to launch digital currencies as well. Sberbank, Russia’s largest state-owned bank, is trying to court approval for the launch of its blockchain-based platform, which will aid the bank to launch a digital currency.

 

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