The Bank of Japan (BOJ) has announced results of the second phase of its proof-of-concept (PoC) experiment. This phase of the CBDC experiment, running from April 2022 to March 2023, took into account supplementary functions to the basic ledger functions that had been tested in the first phase.
Its purpose was to test technology for implementing upper limits on CBDC holdings, which the BOJ described as “safeguards ensuring the stability of the financial system” in case there is a sudden shift in the monetary system from bank accounts to the CBDC.
Cases in which a single user has multiple accounts with multiple intermediaries come under this. The convenience of users to initiate and schedule their payments was also inspected.
Some backend experiments involved tests with the database language and design of the ledger along with the trial of a flexible-value token model. For a more speedy handling of multiple transactions with the same account, an orchestration system was also executed.
100,000 users were assumed with five intermediaries in the experiment which examined loads of 500 and 3,000 transactions in one second. Focus on increasing scalability and enhancing privacy was also discussed in brief in the experiment. In light of preventing fraud and preserving privacy, offline payments were also considered.
The report confirmed that the BOJ had moved on to its scheduled CBDC pilot project. The CBDC pilot will look into “end-to-end process flow” along with connections with external systems. The report stated, “Whether to issue a CBDC should be decided by discussions among the Japanese public.”
The PoCs were announced to be successful in achieving their desired results and a CBDC Forum will now be created for studying the use of the digital currency by private businesses. The BOJ has planned to take a final stance on CBDC issuance by 2026.
The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash