Japan halts digital yen project

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The Bank of Japan has stopped working on its own digital currency project due to lack of public interest.

Like many other central banks around the world,Since 2021, the Japanese Central Bank (BoJ) has been conducting activities to study the potential of central bank digital currencies (CBDCs) in order to experimentally test the performance of the main functions and features of the CBDC retail ecosystem. The second stage of testing began in April 2022, but even then the Bank of Japan did not consider the possibility of introducing a digital yen in the near future.

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Based on the results of testing, the Central Bank of Japan came toconclusion that the country's citizens have almost universal access to the banking system, so the issue of expanding access to financial services is not important from a political or economic point of view. And the widespread use of digital and mobile technologies when paying for goods and services calls into question the need to develop alternative, less popular forms of payments.

The public also found the use of CBDCunattractive. In particular, existing payment instruments provide tangible benefits—for example, points that can be earned from using payment services that can be accumulated and used for subsequent purchases.

As a result, the Bank of Japan explained the abandonment of the digital yen program by a lack of interest on the part of citizens.

Previously, the leadership of the Central Bank of Japanhas repeatedly stated that the regulator will carefully and gradually test the digital yen, and is not going to conduct large-scale pilot projects, as China is doing.

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