Japan's Central Bank to Experiment with Digital Yen in April

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So, you've undoubtedly heard about cryptocurrencies, right? With the beginning of their Central Bank Digital Currency (CBDC) testing program in April, Japan is moving a step further.

I get your question: What the heck is a CBDC? It's basically a digital equivalent of the Japanese yen that was developed and is supported by the central bank of that nation. CBDC would enable direct payments between people, businesses, and the government, all done through a digital wallet, as opposed to actual currency or even electronic transfers through a bank.

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You may now be asking why Japan is taking this action. There are a few reasons, to be sure. One benefit is that it may aid in financial inclusion by providing individuals without access to conventional banking services with a risk-free means of storing and using their money. As banks and other middlemen wouldn't be required, it may also result in decreased transaction costs.

Yet CBDC might also aid in monetary policy, so it's not only about practicalities. The central bank could better regulate inflation and economic development if it had more control over the amount of money in circulation.
CBDC might also have certain disadvantages. Because every transaction will be traced and documented, there may be less privacy as a result. Although the Japanese government has underlined that they are taking steps to assure security, there is nevertheless the possibility of fraud and cyberattacks.

What will this testing program consist of, then? The Bank of Japan will reportedly test out CBDC's fundamental operations, including issuing, distributing, and redeeming digital yen, first. Later, they'll go to more sophisticated capabilities like cross-border transactions and compatibility with current payment systems.

It's crucial to remember that this is now only a trial program, and it can take a while for CBDC to become publicly available in Japan. Still, it's intriguing to see a significant global economy investigating this novel idea.

Japan is not the only country testing CBDCs though; Sweden and China are two more. It's feasible that more and more nations may look into the notion of a digital currency as the globe gets increasingly digital.

What do you think about CBDC, then? Are you interested in the possibility of a digital yen, or are you worried about security and privacy? Comment below and let me know!

Reference : Crypto Potato