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Japan's Digital Yen Pilot To Commence Following Successful Trials
Japan's central bank advances towards a DigitalYen after successful trials, next phase to test real-world conditions.
The Bank of Japan (BOJ) is advancing towards a pilot project for a digital yen, having completed the second phase of its proof-of-concept scheme. Key focus areas in the experimental phase included expanding the decentralized ledger's functionality, assessing privacy concerns, fraud prevention, and evaluating offline payments capability.
This latest success sets the stage for an in-depth pilot that explores transactional processes and enhances external systems' integration. However, the timeline for the pilot's launch is yet to be confirmed, as the BOJ seeks public feedback. A final decision on the digital yen is expected by 2026.
The recently-concluded phase of the digital yen project involved meticulous trials of several aspects of the CBDC. This included working with the database language, ledger design, and implementing a flexible-value token model. The project team also tested an orchestration system for efficient handling of multiple transactions from a single account.
An important component of the trials was testing a technology to set upper limits for CBDCs. This safety measure aims to maintain financial system stability, even during instances of sudden mass liquidity withdrawal from bank accounts and increased demand for the digital yen.
The experiments were conducted with the participation of 100,000 users and five financial intermediaries, thus validating the CBDC's software solutions for payment transactions under a load of between 500 and 3,000 transactions per second.
As the BOJ moves forward, the upcoming pilot project will further delve into the end-to-end process flow, emphasizing broader integration with external systems. Still, the launch date of the pilot remains undetermined and will be decided following public deliberations on the project's specifics.
As Japan's Web3 sector continues to grow under the guidance of the Ministry of Economy, Trade and Industry, the BOJ aims to make a final decision about the launch of the digital yen by 2026. This CBDC pilot project signifies a significant milestone in Japan's journey towards a digitized economy.
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