BOJ to start experimenting on launching its own digital currency

The Bank of Japan will conduct three phases of experiments before fully launching

The Bank of Japan (BOJ) said it will begin experimenting on operating its own digital currency next year.

It comes as the Bank for International Settlements and seven central banks including the Federal Reserve, European Central Bank and the Bank of England published a report laying out some key features for central bank digital currencies, or CBDCs.

The BOJ said it will conduct three phases of experiments to examine CBDCs before fully launching.

In the first phase it will look closely into how CBDCs can be used for general purposes by the general public including companies and households.

The experiments will start in the fiscal year beginning in April 2021.

These CBDCs will complement rather than replace cash and focus on making payment and settlement systems more convenient, it said.

In the second phase, the BOJ will look at the potential design of CBDCs such as whether there should be a limit on the amount issued and a remuneration paid on deposits.

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For the final step, the BOJ will launch a pilot programme involving private firms and households, it said.

The BOJ added it would like CBDCs to be used for domestic as well as cross-border payments.

The bank is also creating a new team to focus on issuing digital currency and undertaking research with other central banks.

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