A report reveals that the Bank of Japan plans to conduct CBDC experiments with the country's megabanks

Key points: 

• The Bank of Japan is planning a digital yen trial with the country’s three major banks and regional banks.
• While the report does not name banks, Japan's "Big Three" typically refers to Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, and Mizuho Financial Group.
• The trial will last for two years, with the central bank deciding in 2026 whether to issue a CBDC.
• Last year, a BoJ official said the central bank's top priority is to ensure that a CBDC allows competition among private payment providers and is widely available to the public.

The Bank of Japan (BoJ) is planning a digital yen trial with the country’s three major banks and regional banks, Nikkei reported on Wednesday.

Starting in the spring of 2023, the BoJ will work with private banks and other organizations to identify problems with deposits and withdrawals and see if a central bank digital currency (CBDC) can work during natural disasters and in areas without internet access, the report said.

While the report does not name banks, Japan's "Big Three" typically refers to Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, and Mizuho Financial Group.

The BOJ joined a growing number of central banks around the world researching CBDCs last year by developing a digital yen testbed and checking basic functions such as issuance, distribution, and redemption.

Last year, a BoJ official said the central bank's top priority is to ensure that a CBDC allows competition among private payment providers and is widely available to the public.

The trial will last for two years, with the central bank deciding in 2026 whether to issue a CBDC, the report said.