China and Japan advance their CBDC pilots

Asia’s largest economies China and Japan, are working intensively to promote their testing of the central bank digital currency CBDC. In total, six Chinese banking entities already offer digital wallets and Japan has established a new committee to work in this regard.

The Bank of Japan has announced that it has decided to carry out the creation of the Liaison and Coordination Committee on the central bank digital currency to meet with the private sector about the next proof of concept of the same

«The Bank, through this committee, will share details and provide updates on the proof of concept with the private sector and the government and will seek consultations on future steps to facilitate the implementation of the proof of concept,» the bank said in its statement.

The announcement also mentioned that the bank is working to launch a CBDC pilot since October 2020; and it is planned that start its Phase 1 next April.

Digital wallets in China

For its part, on March 23, the Chinese state media Sina reported that six of the country’s main banks have already begun tests to test their digital wallet services. In this way, clients can request the whitelist of the banks to participate in the test. If your request is accepted, you will be issued sub-wallets connected to the digital application. RMB of the central bank. However, it must be taken into account that the central bank will be the one that reviews the requests for each particular case.

Applicants who are approved by the banking entity will receive a text message containing the instructions to proceed with the download and configuration of the digital wallets with the scanning a QR code. The subwallets will initially have a payment limit of 1000 yuan daily, but users can request an increase to this limit in the future.

Wallets can optionally be linked to existing bank cards; and that they are issued by the institutions that are part of this initiative.

The six banks that form part of it are: the Agricultural Bank of China, the Bank of China, the Bank of Communications, the China Construction Bank, the Postal Savings Bank of China and the Industrial and Commercial Bank of China. It should also be taken into account that China has also been preparing its CBDC in different metropolitan centers such as Chengdu, Suzhou, Shenzhen and Beijing since last October.

The digital yuan, with greater privacy protection

THE People’s Bank of China intends to allow anonymous digital yuan transactions of small amounts. In this way, we try to ensure that users who wish to do so can enjoy a certain anonymity. This seeks to offer a response to one of the main concerns of users regarding the use of CBDCs.

In this way you can see how the Chinese authorities are willing to guarantee maximum privacy for the user of the digital currency issued by their central bank. However, authorized voices from the Central Bank of China have stressed that a completely anonymous CBDC is not feasible. The reason for this is that it must comply with a series of basic requirements that are related to the fight against money laundering, tax evasion and the financing of terrorism. In any case you will have a minimum of privacy.