Any digital currency the Bank of Japan issues should have a simple design that private firms can use to develop financial and payment services for customers, a senior central bank official said on Friday.

If central banks were to decide on issuing digital currencies, they need to co-exist with private-sector payment services, BOJ executive director Shinichi Uchida said.

“To achieve vertical coexistence, a relatively simple central bank digital currency (CBDC) design is desirable for the private sector to use it as an ingredient” to develop various services, he told a speech.

For example, private entities could develop services that allow customers to use both CBDC and private payment means with a single wallet, Uchida added

The BOJ will move to the second phase of experiments on CBDC starting in April next year, which will focus on testing some key features such as whether to set a limit on the amount that each entity can hold, the central bank said in a hand-out at a meeting with the private sector on Friday.

Global central banks have stepped up efforts to develop their own digital currencies to modernise financial systems and speed up domestic and international payments.

The BOJ has said it currently has no plan to issue CBDC, butit has set up a regular panel to exchange views with the private sector as part of efforts to ensure any digital currency it issues does not stifle private innovation.