The Japanese central bank will begin experiments with a proof-of-concept digital yen early next year, Nikkei reported.
The Bank of Japan will work with several unnamed financial institutions to stress test a central bank digital currency. Tests will include how deposits and withdrawals can work, and also what happens when no internet access is available.
A decision will be taken in 2026 on whether to formally adopt a digital yen.
Most large economies are trying to develop some form of state-backed digital currency, with some, including China and Nigeria, already rolling out wallets for public use. Those experiments may prove unsuccessful but it's important for central banks to ensure there was a widely available digital settlement asset, Jon Cunliffe, deputy governor of the Bank of England said on Monday. He warned that a few large commercial players might otherwise dominate and control crucial payment services.
Tom Matsuda contributed reporting for this story.
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