Japan’s largest lender Bank of Tokyo-Mitsubishi has stated that it is carrying out experiments on a digital currency using bitcoin based technology.

Bank of tokyo

The confirmation comes in the wake of a report by the Asahi Shimbun newspaper last week which stated that the bank is preparing to roll out its own digital currency next year.

Bank of Tokyo-Mitsubishi spokesman was quoted by Reuters as saying: "Regarding the speculation (in) media reports, these reports are not based on any announcement by Mitsubishi UFJ Financial Group (MUFG), and the details have not been decided.

"However we can only say that it’s true that MUFG is conducting demonstration experiments on the ‘Coin’ within the company utilizing a block chain technology."

The Japanese daily The Asahi Shimbun reported that the bank’s digital currency- MUFG coin- will be available in the autumn of 2017.

The bank will enable users to withdraw money from their bank accounts into an app on their smartphones. Users can exchange the currency at a rate of JPY 1 for one MUFG coin.

Users will also be allowed to transfer MUFG coins to other users and offered with a facility to exchange the digital currency for foreign currencies. The bank has assured that commissions and fees collected for such transctions would be lower.

The bank is also looking to set up ATMs for MUFG coins and it is likely to make them available for users in the spring of 2018. By using the ATMs, users can withdraw the digital currency into their electronic wallets and convert MUFG coins into cash.

Blockchains, which are online ledgers to record transactions, have gained prominence following the growing popularity for the digital currency bitcoin.

Distributed ledger technology is expected to help in completing financial transactions with greater speed, security, cost-efficiency and transparency compared to the existing system.

A consortium of major global banks launched R3 CEV in September 2015 to develop and test the blockchain technology for financial services companies. Its members include Goldman Sachs, BNY Mellon, UBS, JP Morgan and Deutsche Bank, among others.

Image: MUFG’s headquarters, Chiyoda-ku, Tokyo, Japan. Photo courtesy of Kakidai/Wikipedia.