On October 9, a group of seven central banks in partnership with the Bank of International Settlements published a joint report on Central Bank Digital Currencies (CBDCs) focusing on core features and foundational principles of CBDCs.
CBDCs discussions gaining momentum
This year CBDCs have been a popular topic with several countries showing interest in virtual currencies. One of the countries that have pushed forward with plans for a CBDC is China with its digital Yuan despite not contributing to the report. The country is already piloting its digital currency with around $162 million digital Yuan transactions so far completed.
The Bank of Japan was among the seven group members, and it released a document alongside the report showing its approach to central bank digital currencies from its Japan-centric view. Other central banks involved in drafting the report include the US Federal Reserve and The Bank of England.
The BoJ’s report indicates that Japan will start its several piloting phases for its digital currency in 2021. The testing phases include the development of a test environment for a digital currency and test on the basement functions as a payment instrument. Further, the BoJ report points out that the digital currency’s core feature should be resilient in the face of infrastructure changed by forces Majeure.
Japan wants a CBDC that can be available even during system failure
The report added that considering the frequent natural disaster in Japan, it is important to have offline use during power outages and network or system failures. Japan is susceptible to different natural disasters that include typhoons, floods, tsunamis, volcanic eruptions, and cyclones because of its geographic positioning.
The BoJ report didn’t offer details on how they will provide during disasters. However, there are solutions for bitcoin and other cryptos that address problems of network failures or power outage. Some of the solutions include a Blockstream satellite network that broadcasts BTC transactions through space and Mesh networks based on the long-wave radio transmitter.