Japan has plans to issue its own digital currency. The move comes after a Bank of Japan (BoJ) decision to join with five other central banks to share knowledge on issuing digital currencies at a later time.
According to a report on Friday, lawmakers from the party feel a digital yen is needed to counter the approaching launches of Libra and China’s digital currency.
Aimed at keeping Japan at the forefront of fintech innovation, the digital currency could be a joint initiative between the government and private companies that would put Japan in tune with global changes in financial technology, Norihiro Nakayama, parliamentary vice minister for foreign affairs said. The initial stage would be to research the prospect of the digital coin.
The ruling party group is led by former Minister of the Economy, Trade and Industry Akira Amari and would put the plan before the government possibly next month.
Keeping an open mind, the BoJ joined five other banks in forming a new working group with the Bank of International Settlements to share research findings about potential cases for central bank digital currencies; and according to Prime Minister Shinzo Abe, the government will work with the BoJ to examine digital currencies and ways of improving the yen as a means of settlement.
Finance Minister Taro Aso said earlier this month that it would be a “very serious problem” if digital yuan becomes a popular means for international setttlement, as Japan settles transactions mostly in dollars.
Following After China
However, former BoJ board member Takahide Kiuchi said China and Japan have different considerations for pursuing the issuance of digital currencies. For China, the motivation is to enhance the yuan’s clout in the global community; for Japan, it would be to change the country’s cash-loving culture, he said.
Former BoJ board member Takahide Kiuchi suggested in the report that the central bank would probably not want to do anything that would stifle private-sector innovation. The best way could be to issue a hybrid-type digital currency that is operated and issued by private firms, with the central bank’s involvement.