The Bank of Japan (BOJ) on Monday kicked off the first phase of experimenting with a central bank digital currency (CBDC), having made the necessary preparations in the first quarter.
"In PoC Phase 1, the Bank plans to develop a test environment for the CBDC system and conduct experiments on the basic functions that are core to CBDC as a payment instrument such as issuance, distribution, and redemption," the BOJ said in an announcement on Monday.
The blockchain PoC, or proof of concept, is a demonstration of the real-world feasibility of the project idea.
BOJ's Phase 1 will run through March of next year, following which the central bank will make a detailed assessment of the CBDC's various functions, including the maximum amount of the currency a single entity can hold, as per Reuters.
Interest in CBDCs and contactless payments has grown in the wake of the coronavirus pandemic and its requirement to avoid physical contact.
A survey conducted by the Bank for International Settlements this year showed 86% of central banks are actively researching the potential for CBDCs, 60% are experimenting with the technology, and 14% are deploying pilot projects.