Bank Of Japan To Run Digital Currency Experiment With Country’s Megabanks

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Japan’s central bank is planning to run a digital currency (CBDC) experiment with the country’s major financial players.

On Wednesday Nikkei reported that the Bank of Japan had teamed up with three megabanks and regional financial institutionsto start a digital yen trial in spring 2023

If all goes according to plan the BOJ may go ahead and release a CBDC in 2026.

Last week, major financial institutions in the U.S also announced they were working with the Federal Reserve to test a digital currency platform.

Meanwhile, privacy advocates have voiced concerns that CBDCs will allow the state to snoop on citizens’ spending.

Yahoo Finance reports: The BOJ’s experiment will explore how deposits and withdrawals can work with a digital yen, today’s report noted.

A CBDC is a digital version of a state’s fiat currency—like the U.S. dollar or the euro—backed by a central bank. CBDCs are digital assets, but are different from the likes of Bitcoin, Ethereum, or Dogecoin.

This is because Bitcoin and other cryptocurrencies are decentralized; their ledger of transactions is maintained and checked by a distributed network of validators. CBDCs, by contrast, are centralized: a central power—the government or central bank—controls them. Different countries around the world are in different stages of researching and releasing CBDCs.

China is well ahead of the game—some citizens are able to spend the digital yuan. The Bahamas, meanwhile, launched its own CBDC back in 2020.