The Bank of Japan has announced the start of the testing phase of its centralized digital currency. Through the tests it is now initiating, it will experiment with the functioning of virtual payment instrument which might be called ‘Digital Yen’.
In an initiative in which more than thirty large Japanese companies and corporations are also participating, the Bank of Japan aims to promote the digitalization of the country to place it at the forefront of financial technology. Among these thirty companies are banks, stock market investors, some utilities, and also retail companies.
In the case of electronic payments, the three main Japanese banks have independent platforms, which are not interconnected, and now, with a centralized digital yen, they could access the unification of the various electronic payment systems.
The tests will run until March 2022, and during these 12 months, the Bank of Japan will test the operation of its digital currency in aspects related to its issuance, distribution, and redemption.
Unification of payment systems
The most popular cryptocurrencies, such as Bitcoin or Ethereum, are decentralized digital currencies since there is no agency, state, or central bank that supports or controls them. In contrast, centralized digital currencies take on the advantages of cryptocurrencies in terms of flexibility and dynamism in their use, adding the guarantee and backing of a Central Bank, as is the case of this Japanese digital currency that is now being born.
In the meantime, the European Central Bank will face in a few months the study of a digital euro project, which, if approved, would give way to an initial phase that would lay the foundations of this possible new centralized virtual currency. This possible digital euro would take at least five years to become a reality, as the President of the European Central Bank, Christine Lagarde, declared at the beginning of 2001.
