The Bank of Japan’s Approach to General Purpose CBDC (BoJ)

The Bank of Japan (BoJ) published the English version of the chapter in its 2024 Payment and Settlement Report on its approach to general-purpose central bank digital currency (CBDC). The BoJ is engaging with various stakeholders through the CBDC Forum and thematic working groups to discuss critical aspects such as system connections, overlay services, KYC/AML/CFT, new technologies, user interfaces, and interoperability with other payment instruments. The BoJ has progressed through multiple phases of experimentation since 2021, including two proof of concept phases that tested basic CBDC functions and ledger designs, followed since April 2023 by end-to-end system testing with private sector participation through the CBDC Forum. Key principles guiding the approach include maintaining a two-tiered system with private sector involvement, ensuring horizontal coexistence between CBDC and existing payment instruments (cash, bank deposits, digital money), protecting user privacy through separated system components, and achieving interoperability across different payment methods. [Read more at the BoJ]

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