China and Japan go full steam ahead with CBDC pilots

China and Japan are pushing forward with their respective pilots for central bank-issued digital currencies, or CBDCs.

On March 26, Bank of Japan announced it had established the Liaison and Coordination Committee on Central Bank Digital Currency to convene with both the private sector on the banks upcoming CBDC proof-of-concept, or PoC, stating:

“The Bank, through this committee, will share details of, and provide updates on the PoC with the private sector and the government and will seek consultation on future steps to facilitate smooth implementation of the PoC.”

The announcement also noted the bank has been preparing to conduct a pilot CBDC since October 2020, and will formally commence Phase 1 of its CBDC pilot next month.

On March 23, Chinese state media outlet Sina reported that six major government-owned banks have begun testing wallet services for the digital renminbi. Customers can apply for the banks’ whitelists to participate in the trial, and if approved, will be issued sub-wallets connected to the central bank’s digital RMB application.

The central bank will review applications on a case-by-case basis.

Approved applicants are sent text messages containing instructions on downloading and setting up the digital wallets by scanning a QR code. Sub-wallets are initially set with a payment limit of 1,000 yuan daily, but users can apply to raise the limit in future. Wallets can optionally be linked to existing bank cards issued by the participating institutions.

The six banks participating are the Agricultural Bank of China, Bank of China, Bank of Communications, China Construction Bank, Postal Savings Bank of China, and The Industrial and Commercial Bank of China.

China has also been piloting its CBDC in the metropolitan centres of Beijing, Shenzhen, Suzhou, and Chengdu since October.