Today, the Bank of Japan (BoJ) announced that it has completed the first phase of its Central Bank Digital Currency (CBDC) Proof of Concept (PoC) on schedule and will begin its second phase in April.
The BoJ first published a paper on its approach to CBDC in October 2020, and it began the first phase of its PoC testing in April 2021. The initial stage targeted exploring the basic functions of a CBDC – namely, issuance, distribution and redemption.
The second phase aims to implement additional functionality of the CBDC, investigate their feasibility, and uncover challenges in the process. During this phase, some key areas of interest might include balancing anti-money laundering requirements with privacy protections. The bank has also previously stressed the importance of cybersecurity for a secure CBDC environment and the incorporation of counterfeit deterrence technology to prevent various illicit activities.
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