Japan launches digital yen pilot project after second successful proof-of-concept
The Bank of Japan (BOJ) has released the results of the second phase of its central bank digital currency (CBDC) proof-of-concept (PoC) experiment and confirmed that its CBDC pilot project launched on schedule in April. The second-phase PoC ran for a year, from April 2022 to March 2023, and considered functions to complement the basic ledger functions tested in the first yearlong experiment.
According to the BOJ report, the second phase tested technology to implement upper limits on CBDC holdings, which it described as “safeguards ensuring the stability of the financial system” in case of a sudden shift from bank accounts to the CBDC. That included cases where a single user had multiple accounts with multiple intermediaries. User convenience in initiating and scheduling payments was also examined.
Related: 7 central banks and BIS continue examination of ongoing policy issues for retail CBDC
In the backend, experiments were made with the database language and ledger design, and a flexible-value token model was trialed. An orchestration system was implemented to handle multiple transactions with the same account more quickly.
Today's #Fintech Digest does a deep dive into the Bank of Japan central bank digital currency (#CBDC) proof-of-concept (PoC) work, the results of which were published today. https://t.co/2Iclpl8HsW pic.twitter.com/8wyRhiI2vE
The experiment assumed 100,000 users with five intermediaries and looked at loads of 500 and 3,000 transactions per second, with a discussion of increasing scalability. Privacy was considered throughout but not discussed at length. Offline payments were discussed in the context of fraud prevention and preservation of privacy.
The PoCs were declared successful in achieving their
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