• Japan is set to begin piloting its central bank digital currency (CBDC) in April 2023.
• The Bank of Japan is designing the CBDC based on Sweden’s e-krona model, and will conduct parallel transactions with private businesses as part of the testing phase.
• China has already conducted pilots for its digital yuan across several states.

Japan Begins CBDC Pilot in April 2023

The Central Bank of Japan has announced that it will begin piloting its central bank digital currency (CBDC) in April 2023. The design is being modeled after Sweden’s e-krona, which underwent various testing phases to ensure compatibility with the country’s financial system and cross-border payments.

China’s More Aggressive Approach to E-CNY

China has taken a more aggressive approach to its own CBDC, known as e-CNY, with promotional campaigns being conducted across local governments and issuing rewards for citizens who use the currency.

Bank of Japan Taking Cautious Approach

The Bank of Japan has stated that they are taking a cautious approach to their own CBDC development, so as to roll out a product that is compatible with the domestic monetary system. They have noted that they do not wish to follow China’s steps in this regard.

Testing Phase Aimed at Mass Adoption

The testing phase will involve transactions with private businesses in order to better understand customer preferences and usage patterns when it comes to using a digital currency. This data can then be used by the central bank to improve their design and create a product which can be widely adopted by Japanese citizens.

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