Japan took a major step toward embracing digital currencies in February 2023, as the Bank of Japan (BOJ) launched the first phase of trials for a digital yen (CBDC).

The pilot project tested the feasibility and technology behind a state-backed digital currency, a move that reflected Japan’s desire to stay competitive as more countries explore digital currencies.

The trial saw a limited number of participants, including private financial institutions and tech companies, testing the system for digital yen transactions.

The BOJ noted that the digital yen would offer greater security, reduce transaction costs, and support the government’s cashless society push.

While the program was still in its experimental phase, it drew attention from other economies looking to launch their own digital currencies, including China’s digital yuan.

Japan’s push towards a digital yen comes amid increasing concerns over the influence of private cryptocurrencies like Bitcoin and Ethereum, which have raised issues regarding market volatility and the potential for illicit activity.