TOKYO -- Mizuho Financial Group has partnered with IBM Japan to develop a digital currency that could reduce the cost of money transfers and lead to new mobile payment services.
The Japanese megabank and IBM tested the virtual currency from July to September using an app that calculates how much each member of a dinner party owes for meals and drinks.
In the trial, 1 yen equaled one unit of the currency. The duo tested if one person could pay the whole bill using the currency, and if it is possible to create services that would, among other things, alert members to the amount they owe.
While the testing did not reveal any major problems, safeguarding user information remains a concern, according to Mizuho. The group will consider whether actual services can be created using the currency.
Perhaps the world's best-known virtual currency, bitcoin, already uses blockchain technology. Since the technology does not require major information technology investments, operating costs can be kept low.
Virtual currencies have the potential to lower handling fees in bank transactions significantly, as users can make transactions directly with one another using their own computers or smartphones.
Another big Japanese bank, Mitsubishi UFJ Financial Group, is pursuing its own virtual currency.
But virtual currencies run the risk of being targeted in cyberattacks. Regulators including the Financial Services Agency are working to address privacy and other security concerns.