With the end of the proofs-of-concept, the Bank of Japan has started its CBDC pilot and plans to gather further public and business feedback.
The Bank of Japan (BOJ) has released the results of the alternate phase of its central bank digital Currency (CBDC) proof-of-concept (PoC) trial and confirmed that its CBDC pilot project embarked on schedule in April. The second-phase PoC ran for a year, from April 2022 to March 2023, and considered functions to complement the introductory ledger functions tested in the initial yearlong experiment.
According to the BOJ report, the alternate phase tested technology to implement upper limitations on CBDC holdings, which it described as “ safeguards ensuring the stability of the financial system ” in case of a sudden move 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 similarly examined.
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In the backend, trials were made with the database language and ledger design, and a flexible-value token model was trialed. An orchestration system was implemented to handle numerous deals with the same account more quickly.
The trial assumed 100,000 users with five intermediaries and looked at loads of 500 and 3,000 deals per second, with a discussion of raising scalability. Privacy was considered throughout but not discussed at length. Offline payments were talked over in the context of fraud prevention and preservation of privacy.
The PoCs were published successfully in achieving their desired results, and the report confirmed that the BOJ had shifted to its scheduled CBDC pilot project. The pilot will examine “end-to-end process flow ” and further connections with external systems. The report said:
“Whether to issue a CBDC should be decided by discussions among the Japanese public.”
A CBDC Forum will be created to gain insight from private businesses. The BOJ has stated that it'll make a final decision on the allocation of a CBDC by 2026.
(DEREK ANDERSEN, Cointelegraph, 2023)