Bank of Japan begins testing experimental digital currency

This phase will last until March 2022 and will focus on exploring the “technical viability” of the currency.

The Bank of Japan launched today the first phase of tests with a digital currency, conceived in response to the boom in digital payment services and cryptocurrencies, and in line with initiatives undertaken by other leading entities.

The central bank of the third world economy will experiment with “the basic functions of issuance, distribution and payment” of the digital currency, as explained in a statement.

This phase will last until March 2022 and will focus on exploring the “technical viability” of the currency, said the BoJ, which did not elaborate on the project.

The BoJ announced last October that it would launch this initiative in three phases with the aim of adapting to the “rapid development of digitization” in financial services, which it said may create “a peak in demand for a centralized digital currency” for its use by individuals and companies.

The entity considers it necessary to “prepare deeply to respond to these circumstances”, although it specified then that “for the moment” it was not in its plans to issue its own digital currency.

The next phase of the BoJ project will address the security and anonymity aspects of currency users, and its final phase could include the launch of a pilot program with the participation of the private sector.

The BoJ has also participated as an observer since last June in a platform created by three of Japan’s largest banks and technology companies to develop a “digital yen”, an electronic payment system based on the Japanese currency and the chain’s technology. of blocks.

Japan became in 2016 one of the first countries to regularize cryptocurrencies such as bitcoin, the most popular of the currencies of this type, characterized by its decentralization and by using blockchain and cryptography technologies to guarantee your safety.

The rise of cryptocurrencies has put financial authorities and central banks around the world on guard, who see in these virtual currencies a potential vehicle for illicit activities, as well as a long-term threat on their control of monetary policy.

Bitcoin has a market capitalization of over a trillion dollars, eight times more than last April and above the value of companies such as Facebook, Alibaba or Visa, according to data from the Companies Market Cap website.

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