For a country with a high seismic risk such as Japan, the offline availability of the asset is a key feature
On 9 October, the Bank for International Settlements (BIS), in collaboration with a group of seven central banks, published its first joint report on Central Bank Digital Currencies, focusing on the fundamental principles and essential features of CBDCs.
At the same time, the Bank of Japan, one of the members of the group, published a paper outlining its national approach to CBDCs.
According to the BoJ, in 2021 the first of several testing phases of the Japanese CBDC will begin, namely the development of a testing environment for the currency and the running-in of its basic functions as a payment instrument.
The Japanese central bank notes that a key feature of digital Bitcoin Union currency must be resilience to infrastructure that may be affected by unforeseen natural events:
„For Japan, given the frequent occurrence of natural disasters, it is essential to provide for the possibility of using the CBDC even offline, in the event of system or network failures or power outages“.
Due to its geographical and geological composition, Japan is subject to a wide range of natural disasters, including earthquakes, tsunamis, floods, typhoons, cyclones and volcanic eruptions.
The report does not provide details on how action could be taken to prevent such events from impacting CBDC infrastructure, although there are solutions that address potential electrical or network failures on the Bitcoin network (BTC) and other blockchain networks: for example, mesh networks based on long-wave radio transmitters or Blockstream’s satellite network, which transmits Bitcoin transactions across space.
The BIS Digital Currency Research Group was announced in January 2020 and initially included the central banks of Japan, Canada, the UK, Sweden, Switzerland and the European Central Bank. Following the launch of the initiative, the US Federal Reserve also joined the group.