As reported by Coin Telegraph, the bank issued a report on Thursday -- "Technical Hurdles for CBDC" -- that noted upcoming experiments with a central bank digital currency (CBDC) could provide an alternative to the traditional Yen.
The bank has no plans -- as of yet -- to issue a digital currency, but says the organization is willing to explore the concept due to the increased use of digital payments, potentially adopted at a higher rate than expected due to the novel coronavirus pandemic and the shift by many vendors to contactless or card-based transactions.
The BoJ wants to research two specific areas which the financial institution believes are the main hurdles to adopting digital currency: resilience and access.
Resilience relates to scenarios such as a loss of power or access to IT systems -- an important concept in a country that experiences earthquakes frequently. If there is no means to access a currency when systems are down, this could provide economically damaging.
In addition, a full shift to digital currencies could be a disaster for vulnerable or elderly members of society, who may need to use cash on a daily basis and who may not have access to the mobile technology or apps used to access funds.
Local publication Nikkei estimates that as of 2018, only 65% of Japanese citizens owned a smartphone.
As a result, the Japanese bank not only needs to find a feasible digital currency that can be used widely, but also one that can be accessed offline, in any environment, and not necessarily require reliance on a mobile device.
The start date for the experiments is yet to be announced, but the bank intends to work with other financial institutions and technology companies soon to find a balanced way forward. In particular, offline payments that do not encourage or exacerbate fraud are a topic of interest.
Japan's announcement follows China, a country that has already begun testing its own CBDC. Touted as a potential rival to the US dollar, China's ruling party intends to trial cryptocurrency across Shenzhen, Chengdu, Suzhou, and Beijing.
Comment: A cashless society is a controlled society. But as with coronavirus lockdowns, the population seems to be asking for it.