Japanese Banks To Start Experimenting On Digital Yen
The Bank of Japan announced on Thursday that it was experimenting with a digital central bank currency (CBDC) to test its feasibility from a technical point of view.
On Thursday, it announced that it was experimenting with the Bank of Japan’s (JCB) digital currency to test its viability from both a technical and an economic point of view. The Bank of Japan has announced that it will experiment with a CBDB to check the “feasibility” of its use as an alternative to the traditional currency, the Japanese yen.
Upcoming Challenges to the New Beginnings
It remains to be seen whether Japan can catch up with China, which has already begun testing its own CBDC. The BoJ wants to digitize cash, and this is the first time it has revealed that it would start a proof-of-concept process with a digital yen.
The Bank has not yet announced a timetable, but it is likely that the Bank would begin the proof-of-concept process with the digital yen for the first time.
In a report entitled “Technical hurdles of the CBDC,” the Bank stated that it would examine the feasibility of a CBDC from a technical perspective, cooperate with other central banks and relevant institutions, and consider introducing the CB-DCs.
Blockchain-Based Digital Yen
In February, it was already announced that the Federal Reserve Bank of New York and the International Monetary Fund (IMF) had announced their intention to collaborate on research into digital currency issuance. In its report, the BoJ examines the technical feasibility and feasibility of the digital yen and the use of digital currencies.
While centralized systems have the advantage of large capacity and faster transaction speeds, they also have a single failure point: the blockchain network. Unlike blockchain networks, which require the consensus of multiple validators, DLT-based CBDCs require longer transaction times and cannot overcome individual – point – failures. If, on the other hand, there is only one failure point, the entire system can collapse in seconds.
Significantly The BoJ stressed that, despite using blockchain for CB-DCs, it does not see it as a viable alternative to the traditional banking system.
In other words, it is better to introduce a centralized type in a developing country than a decentralized nature. China’s digital yuan will be tested for the first time in the second half of the year, according to the BoJ.
