The BOJ’s experiment will explore how deposits and withdrawals can work with a digital yen, today’s report noted.
A CBDC is a digital version of a state’s fiat currency—like the U.S. dollar or the euro—backed by a central bank. CBDCs are digital assets, but are different from the likes of Bitcoin, Ethereum, or Dogecoin.
This is because Bitcoin and other cryptocurrencies are decentralized; their ledger of transactions is maintained and checked by a distributed network of validators. CBDCs, by contrast, are centralized: a central power—the government or central bank—controls them. Different countries around the world are in different stages of researching and releasing CBDCs.