Japan probes CBDC as e-payments projects to reach $227B

The Bank of Japan (BoJ) is expanding wholesale central bank digital currencies (CBDC) trials as Japan’s digital wallet market is projected to rise to $227 billion in 2026, signaling faster 24/7 corporate payments in a rapidly cashless economy.

Japan probes implementation of wholesale CBDC

The BoJ has continued its multi-year CBDC research program, which involves dozens of companies and several working groups, even after signaling last year that an immediate launch is unnecessary. In early February, central bank director Kazushige Kamiyama announced plans to broaden the original initiative to include wholesale CBDC and tokenization as part of the central bank’s ongoing CBDC Forum.

According to a Nikkei report on March 1, the BoJ has already begun tokenizing a portion of its current reserves on a blockchain. If the initiative is successful, the central bank would enable “large-value corporate payments” 24/7, aiming for instant cross-border payments and cost reductions.

In June 2025, the BoJ said it was still undecided on a CBDC, as cash usage in Japan remained high. However, rapid digitization in the country has significantly increased cashless payments over the past few years, prompting the central bank to explore a digital yen.

At the Fintech Summit FIN/SUM 2024 in March 2024, BoJ Governor Kazuo Ueda explained that public awareness of CBDC in the country remains low, but he sees this as a crucial topic for the central bank. Ueda noted that retail CBDC is being explored as a digital form of central bank money that would share key features with cash. However, unlike physical cash, CBDC “is intangible, with information on the amount and holder provided in the form of electronic data.”

However, the BoJ governor also raised concerns about CBDC privacy, stressing the importance of maintaining Japan’s two-tiered monetary system, protecting users’ data, and carefully designing CBDC to support innovation without disrupting the financial system.

“Whether to issue a retail CBDC in Japan should be decided by discussions among the public. To facilitate such discussions, the Bank has been proceeding with technical experiments and explorations into institutional arrangements,” Ueda said in a speech as published by the Bank for International Settlements (BIS).

Japan’s e-wallet and prepaid card market expected to grow

According to a Research and Markets press release on March 2, Japan’s digital payments are growing, thanks to cashless adoption and the expansion of digital wallet ecosystems. The country’s prepaid card and digital wallet market is projected to grow 10.7% year-on-year, reaching $227.19 billion by 2026. This follows the 12.4% CAGR recorded from 2021 to 2025.

The market growth is expected to remain solid by the end of the decade, with a forecast to expand at a 9.3% CAGR from 2026 to 2030, reaching approximately $324.49 billion by 2030, up from $205.20 billion in 2025. This is thanks to Japan’s rising digital payments ecosystem, which is anchored dominantly on QR wallets, e-money platforms—such as PayPay, LINE Pay, and WeChat Pay—and transport IC stored-value systems, supporting daily spending across retail, transport, and services.

As consumer behavior in the East Asian country continues to shift towards cashless transactions, prepaid cards and mobile wallet integrations are playing a crucial role in expanding transaction volumes and engagement.

Watch: Finding ways to use CBDC outside of digital currencies