The governor of the Bank of Japan has recently announced that it will initiate central bank digital currency (CBDC) experiments in spring. This follows plans by the bank for two Proofs of Concept.
Governor Haruhiko Kuroda mentioned in the announcement, that while the bank “currently has no plan to issue CBDC”, it will prepare for an occasion in the future where it is appropriate to develop a CBDC.
With a great quantity of banks exploring the benefits and drawbacks of CBDC issuance (precisely 86% according to a BIS CBDC survey), Kuroda listed a figure which placed around 60 percent of banks that were conducting a Proof-of-Concept (PoC).
“Since the release of “The Bank of Japan’s Approach to Central Bank Digital Currency” in October 2020, the Bank of Japan has been preparing to conduct experiments in accordance with this approach. We are finally scheduled to begin these experiments in spring 2021”, Kuroda commented.
Governments and central banks across the globe have begun to trial and plan for their own CBDC, with Steve Forbes- Editor-in-chief of Forbes Media likening the preparations by central banks to preparing for a “cryptocurrency war”.
As Governments face the increased adoption of cryptocurrency in their respective nations, the response by many has been to ban, regulate, or increasingly set forth plans to create their own digital currency.
China’s central bank has been trailing their digital Yuan for several months now, in a push towards the adoption of digital currency that is state regulated. This has seen give-aways and lotteries as well as ATM machines that provide the digital Yuan, as part of the nation’s efforts to be the first to provide a CBDC to their citizens.
Japan’s move towards a CBDC is currently in the first phase of their Proof of Concept which will be followed by further PoC tests in phase 2, and finally if the bank judges it necessary, a pilot programme that involves PSPs and end users will be the third phase of this exploration.
With demand increasing for digital currencies, central banks across the world are initiating plans to prepare for the move to a digitalized future. How that will affect cryptocurrency remains to be seen.
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