The Bank of Japan has launched a pilot program for its central bank digital currency (CBDC), according to a report released by the bank. The pilot program began in April 2023 and is designed to test the end-to-end process flow, explore potential challenges for connection with external systems, and develop solutions indicated as necessary in the PoCs (proof of concept).
The bank initiated the first phase of the proof of concept in April 2021, and the second phase began a year later to evaluate new technologies and accounts provided by multiple intermediaries. The bank plans to explore potential challenges and solutions during the pilot testing.
The Bank of Japan’s pilot program is one of the 18 pilot stages in progress globally, according to the Atlantic Council. The council is tracking CBDCs in 120 countries, and eleven countries have already launched a CBDC, including the Bahamas and Nigeria.
The Atlantic Council predicts that over 20 countries will take significant steps towards piloting a CBDC in 2023. Australia, Thailand, Brazil, India, South Korea, and Russia intend to continue or begin pilot testing in 2023. The European Central Bank (ECB) is also likely to start a pilot next year.
Lawmakers Divided Over Central Bank Digital Currency
The future of a CBDC has mixed reactions among lawmakers. Republican Rep. French Hill of Arkansas and Democratic Rep. Jake Auchincloss of Massachusetts introduced a bill this month, dubbed the Power of the Mint Act, to block the Federal Reserve from issuing a CBDC. Republican Sen. Ted Cruz and Rep. Tom Emmer have also introduced bills to block the Federal Reserve from issuing a CBDC directly to individuals.
Advocates argue that CBDCs can provide better financial services to citizens, while critics argue that CBDCs are a breach of privacy. The Federal Reserve has not yet made a decision on issuing a CBDC, and Fed Chair Jerome Powell said that the bank would need congressional approval.
The Bank of Japan has launched a pilot program for its central bank digital currency. The program is designed to test the end-to-end process flow, explore potential challenges for connection with external systems, and develop solutions indicated as necessary in the PoCs. The future of a CBDC has mixed reactions among lawmakers, with some advocating for better financial services and others concerned about privacy breaches.
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