Japan is in the pilot phase. Over the last few years, the Bank of Japan has conducted multiple pilot, proof-of-concept, and experimental CBDC projects. Reporting from NHK has suggested that the Bank of Japan may try to launch a CBDC by the end of 2024.

CBDC History and Development

In April 2021, the Bank of Japan launched a CBDC proof-of-concept within a closed experimental environment to test issuance, distribution, and redemption mechanisms. This pilot was completed in March 2022. Findings from the proof-of-concept were published in May 2022. Notably, the report stated that the Bank of Japan “currently has no plans to issue central bank digital currency.”

In April 2022, the Bank of Japan moved on to launch a second phase of its CBDC proof-of-concept to test “various additional functions” and “investigate their feasibility as well as challenges.” This second phase was completed in March 2023. In May 2023, the Bank of Japan published its findings from this second phase. This phase included experiments to test restricting holdings, restricting transactions, paying interest, and other functions.

In April 2023, the Bank of Japan officially launched its CBDC pilot program. The pilot program is meant to test how citizens will ultimately access and use the CBDC through a network of intermediaries (e.g., banks and other financial institutions). However, most Japanese citizens appear to have been unaware of this project. When surveyed in September 2023, less than 20 percent of respondents had heard of CBDCs and only 3.1 percent of respondents said they knew about CBDCs.

In January 2024, members of the Japanese government and the Bank of Japan met to discuss potential issues, legal considerations, and system designs for a Japanese CBDC. It was reported that participants of the meeting hope to have legislation finalized by the spring of 2024. In March 2024, Bank of Japan governor Kazuo Ueda said it had still not been decided whether a CBDC would be issued, but the Bank of Japan would continue to engage with the public before making a decision.

The Bank of Japan published an update in April of 2024 that detailed both the history of the central bank’s work on CBDCs and its future plans. Notably, the update said that no decision on whether to issue a CBDC had been made. However, it also noted that the central bank will continue working to build one.

Human Rights and Civil Liberties Concerns

According to Freedom House, Japan ranks highly across nearly all metrics. Even then, however, it’s important to recognize that the creation of a CBDC could open the door to risks to financial privacy and financial freedom.

For additional information on concerns regarding violations of human rights and civil liberties, see the following reports by Amnesty International, Financial Tyranny Index, Freedom House, Human Rights Watch, Privacy International, and the U.S. Department of State. For additional information on concerns regarding the risks of CBDCs, see the following webpage and report by the Cato Institute: The Risks of CBDCs and Central Bank Digital Currency: Assessing the Risks and Dispelling the Myths.

For additional information regarding metrics, the methodology page explains each of the data points and provides their respective sources.