By Takahiko Wada and Daniel Leussink
TOKYO (Reuters) -The Bank of Japan (BOJ) will begin preparations to conduct a pilot experiment with private financial institutions next year towards issuing a digital yen, a source familiar with the matter told Reuters on Wednesday.
The move, widely expected, will follow two years of experiments the BOJ has been conducting to decide whether to issue a central bank digital currency (CBDC).
The Nikkei newspaper reported earlier in the day that the BOJ will start pilot experiments for launching a digital yen with Japan's three megabanks and regional banks next spring.
A spokesperson for the BOJ was not immediately available to comment on Wednesday, a public holiday in Japan.
The move will come after the BOJ wraps up a second phase of its CBDC experiment that started in April, and which will last about a year.
While the BOJ has not made any decision yet on whether to issue its own digital currency, Governor Haruhiko Kuroda said in May that providing a retail CBDC could be an option to secure a seamless and safe infrastructure in Japan.
Kuroda also called at a seminar at that time for increased efforts by global policymakers to contain risks that may emerge from the wider use of private digital currencies.
(Reporting by Takahiko Wada and Daniel Leussink; Writing by Leika Kihara; Editing by Alex Richardson and Gareth Jones)