Japanese credit card giant JCB will introduce CBDC cryptocurrency in Tokyo

Taking advantage of the digital yen experience, Japan may be one of the leaders in introducing the digital currency of the central bank - CBDC. The pilot program will be launched soon by the Japanese giant of credit cards - JCB. It will be based on the technology used by Central Bank of Japan. The stakes are huge, because China is already much more advanced in the work on the digital yuan, and there is a fear that they will dominate the region, and perhaps the world, also in this respect.

JCB's pilot program is expected to start later this year. JCB even has its specific framework. CBDC, i.e. the digital currency of the central bank, previously used mainly for settlements between banks, will of course be based on blockchain technology. Any day soon the experiments and demonstration of the system's operation, which is to be very similar to the CBDC system already used in internal settlements by the Bank of Japan, will begin.

You can pay with cryptocurrency in restaurants in Tokyo

The pilot will simply be tests in a real business environment that will be performed by a specific group. JCB plans to provide its employees with tokens for issue at participating Tokyo restaurants. Then, not only the payments themselves will be monitored, but also whether and how they affect the disruptions of central servers.

The last stage of the tests is to consciously cause network congestion, followed by a simulated hacking attack. Only the reaction under the conditions of maximum load will show whether the system is ready for implementation for everyone. The key is not only its efficiency, but also - and perhaps above all - security.

Cryptocurrencies with face recognition?

Interestingly, blockchain technology is not everything. The system is also to be based on other, latest technological achievements. One of them has, for example, a French supplier of facial recognition technology called IDEMIA, which is to be used in the pilot. This is to strengthen the security of the project, in which the Malaysian fintech and payment company Softspace will also participate.

When will the Japanese CBDC come out?

BOJ, like many of its international counterparts, has not yet committed to introducing the digital currency by a specific date. The matter is complicated by ... the speed with which the Chinese authorities operate. The Bank of Korea also tested at its own pace, while the digital yuan is becoming more common in major Chinese cities. This is worrying on all sides.

The leaders of the countries in the region do not fully trust that the tests were reliable and quick. Although this can even be considered a political game - it is difficult to officially admit that the Chinese considered reproductive ahead of the world in such advanced technology. Meanwhile, the scale of the tests covered entire metropolises, so it is difficult to accuse them of anything. However, central banks are also afraid of the yuan's domination not only in the region but also in the world, and these fears are by all means justified.

Everyone wants the digital yen

Therefore The Bank of Japan accelerated its work on the development of the digital yen. It is supposed to be one of the ways to reduce the country's long-term dependence on cash and increase contactless payments, although in this element the Japanese are among the world leaders.

The largest Japanese credit card company JCB will help in this. It is the only payment platform in the country that also works abroad. The company's arguments for working with a central bank would be even stronger if JCB developed market-ready CBDC solutions. That's why the company has just announced that it will start working in the Web3 sector. In August, it launched a research unit that will focus, among others, on the increasingly popular metaverse space.