News BOJ and top banks to begin digital yen trials in 2023

During the two-year central bank digital currency (CBDC) pilot program, the BOJ will work with private-sector banks to test deposits and withdrawals from accounts, and check whether the currency can work without internet access in an emergency. Depending on the results of the trial, it will decide whether to go ahead with a digital currency as early as 2026. [...] The central bank has yet to decide whether to actually move forward with a digital yen. Beyond the technical questions, a digital yen would require public buy-in as well as laws and systems to accommodate it, which would take time to set up. The bank would continue to issue physical currency alongside its digital counterpart. [...] And unlike existing forms of e-money that are accepted by a limited set of stores and transportation providers, a digital yen would in principle need to be usable anywhere that takes cash to have the same level of convenience. That could also encourage more places to enable cashless transactions, a point on which Japan has lagged other advanced economies.

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