Japan Partners with Megabanks on 2-Year Digital Yen Experiment

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Japan Partners with Megabanks on 2-Year Digital Yen Experiment

<p class="MsoNormal text-align-justify">The Bank of Japan (BOJ) is planning to kick off a two-year digital yen project by the spring of 2023 in partnership with three of the country's megabanks and regional banks. The top three banks in Japan are Mizuho Financial Group, Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group.</p><p class="MsoNormal">Nikkei reports that the central bank digital currency (CBDC) project will test for possible deposit and withdrawal problems that  could arise from the use of a digital yen. Additionally, the experiment will confirm if the digital yen can work when natural disasters strike and if it can also be used in areas without an internet connection.</p><p class="MsoNormal">The new project comes over a year after <a href="https://www.financemagnates.com/cryptocurrency/news/bank-of-japan-begins-cbdc-proof-of-concept-testing-phase-1-today/" target="_blank">the BOJ launched the first phase</a> of its digital yen experiment to test the basic functions of the CBDC such as issuance, distribution and redemption. When phase 1 was announced last year, the Japanese central bank said it will run the trial until March this year.</p><p class="MsoNormal">Furthermore, in a speech delivered in October last year, Shinichi Uchida, an Executive Director of the BOJ, said the apex bank would make efforts to develop a CBDC that can easily co-exist with private payment methods. Uchida added that the financial regulatory authority had no plan to issue a digital yen at that time. However, according to Nikkei, the BoJ said it will decide on whether to issue a digital yen by 2026 following the new project. </p><p class="MsoNormal text-align-justify">The CBDC Race Continues </p><p class="MsoNormal">The interest of central banks in a centrally-controlled digital currency remains strong in 2021 with various national financial authorities launching new projects or trials to test various use cases on CBDCs. </p><p class="MsoNormal">Earlier this month, <a href="https://www.financemagnates.com/fintech/spanish-banks-embark-on-new-digital-euro-test/">up to 30 Spanish banks entered a partnership</a>, with the Bank of Spain as an observer, to carry out new proof-of-concept trials to measure the impact of issuing a digital euro by the European Central Bank (ECB).</p><p class="MsoNormal">Finance Magnates reports that Bizum, a mobile payment solutions provider; Iberpay, a payment service firm that oversees the Spanish interbank <a href="https://www.financemagnates.com/terms/p/payments/" target="_blank" id="f1d2a713-da14-4a6b-8fcd-e8f360d07f45_1" class="terms__main-term">payments</a> infrastructure; and Redsys, a payment system services provider, are collaborators in the project. </p><p class="MsoNormal">In other news, the ECB in mid-September <a href="https://www.financemagnates.com/fintech/ecb-selects-amazon-nexi-others-fordigital-euro-prototype-excercise/" target="_blank">selected five companies</a> including Amazon to participate in a digital euro payment prototyping exercise. The goal, the apex bank said, is to "develop potential user interfaces for the digital euro."</p><p class="MsoNormal text-align-justify">Meanwhile, in October last year, Nigeria, Africa's largest economy and most populous country, <a href="https://www.financemagnates.com/cryptocurrency/news/central-bank-of-nigeria-sends-guidelines-to-banks-on-cbdc-project-e-naira/" target="_blank">launched the e-Naira</a>, the digital version of its currency, becoming one of the few countries in the world to launch a CBDC. However, the project has failed to entice citizens, merchants and deposit money banks, the local Nigerian publication BusinessDay reported.</p>

This article was written by Solomon Oladipupo at www.financemagnates.com.

Source: Japan Partners with Megabanks on 2-Year Digital Yen Experiment