The Bank of Japan has started developing a CBDC with three megabanks, according to a Nikkei report on Wednesday. According to an important newspaper report today, the Bank of Japan has started to organize a central bank digital currency (CBDC) experiment with the country's major financial firms.
According to Wednesday's Nikkei article, the Bank of Japan is collaborating with three megabanks and regional banks in the Asian country and will test a digital yen in 2019. The newspaper stated that if all goes as planned, the BOJ could issue a CBDC in 2026.
According to today's news, the BOJ experiment will examine how deposits and withdrawals can work with a digital yen.
The central bank-backed digital equivalent of a government's fiat currency, such as the US dollar or euro, is known as a CBDC. Digital assets such as Bitcoin, Ethereum, and Dogecoin are not the same as CBDCs.
This is due to the decentralized nature of Bitcoin and other cryptocurrencies, whose transaction records are kept and verified by a dispersed network of validators. In contrast, CBDCs are central; they are under the control of a single institution, typically the government or the central bank. The review and release of CBDCs is at various levels in various countries around the world.
Some Chinese are able to use the digital yuan, which puts China well ahead of the curve. In response, the Bahamas introduced their own CBDC in 2020. Major American financial firms recently announced that they are collaborating with the Federal Reserve to test a platform for digital currencies.
But privacy groups have expressed concerns that CBDCs will enable the state to monitor residents' spending.