February 17, 2023
Bank of Japan

Commencement of Central Bank Digital Currency Experiments: Pilot Program

In line with "The Bank of Japan's Approach to Central Bank Digital Currency" released inOctober 2020, the Bank of Japan has been conducting experiments on Central Bank Digital
Currency (CBDC) since April 2021.
The Bank will complete the Proof of Concepts (PoCs), through which it has been confirming
the technical feasibility of the basic functions of a CBDC, in March 2023, as initially scheduled.
Following this, in April 2023, the Bank will launch a pilot program.
In the pilot program, the Bank will develop a system for experiments, in which a centralsystem, intermediary network systems, intermediary systems, and endpoint devices areconfigured in an integrated manner. The Bank will, for example, test the end-to-end process
flow while exploring the measures and potential challenges for connecting the experimental
system with external ones. At present, actual transactions are not assumed to take place among
retailers and consumers in the program.
With a view to proceeding with institutional arrangements for CBDC in an appropriatemanner, the Bank will establish a CBDC Forum to discuss and explore a wide range of topics
with private businesses related to retail payments. The Bank plans to hold information sessionsin March to explain the selection process and requirements for participating in the CBDC Forum.
Whether to issue a CBDC should be decided by discussions among the Japanese public. Witha view to facilitating such discussions, the Bank will continue to make thorough preparations
to respond to changes in circumstances in an appropriate manner.

(Reference)
The Pilot Program: An Overview
The Bank will develop a system for experiments, in which a central system, intermediary
network systems, intermediary systems, and endpoint devices are configured in an
integrated manner. It is through this program that the Bank will test the end-to-end process
flow while exploring the measures and potential challenges for connecting theexperimental system with external ones.
Endpoint devices (for consumers/retailers)

Scope of experiments

Intermediarysystem

Intermediarysystem

Intermediarysystem

Intermediarysystem(multi-layered)

Pilot program

Intermediary network system
PoCs
Central system

With a view to proceeding with institutional arrangements for CBDC in an appropriatemanner, the Bank will establish a CBDC Forum to discuss and explore a wide range oftopics with private businesses related to retail payments.
── The findings gained through (1) development and examination of the experimental
system and (2) discussions with private businesses are expected to be shared asnecessary.

Bank of Japan

Contractors

Development of an experimental system
Conduct of performance tests etc.

Discussion withparticipants
Secretariat

Discussion withparticipants

Discussion withparticipants

Secretariat

CBDC Forum

Secretariat

Discussion withparticipants
Secretariat



Through the CBDC Forum, the Bank will discuss and explore with private businesses thefollowing topics in particular for the time being.
── With a view to stimulating and facilitating the discussions, the Bank plans to establish
working groups, taking into account linkages among the topics in consideration.

Agenda (provisional)
・ Confirm the end-to-end process flow in view of the operational
processes of intermediaries; explore the measures and potential
challenges for connecting the CBDC system with external ones includingcore banking systems of intermediaries.
・ Continue research on alternative data models (e.g., token-based) toaccount-based ones and on offline payments; propose alternative data
models and compare with account-based data models.

・Upon gaining participation of private businesses with interest in overlay
services on top of a CBDC as a public good, exchange views from theperspective of “the business and technology of CBDC,” thereby exploring
design requirements for the CBDC system in facilitating overlay services.
・Investigate the technical feasibility of challenges and technologies orfunctions -- such as privacy protection and universal design -- that could
become necessary, in particular where a touchpoint with users arises inproviding a CBDC as a public good.

In fiscal 2023, the Bank will select participants for the CBDC Forum and contractors fordeveloping the experimental system, proceeding with discussions and explorations withthe participants and the development of the system accordingly. The Bank will issue public
updates on these matters in a timely manner.
PoC Phase 1

PoC Phase 2

Pilot Program

Develop an experimental
environment for the CBDCsystem and conduct
experiments on the basic
functions of CBDC
(issuance, distribution,and redemption).

Implement additional
functions of CBDC in theexperimental
environment
developed in Phase 1 andtest their feasibility.

Test the technical feasibility
not fully covered by thePoCs; utilize the skills andinsights of private
businesses in terms oftechnology and operation.

April 2021 - March 2022

April 2022 - March 2023

Start April 2023

If necessary,
expand the scopeof the programand ofparticipants in aphased manner.