Japan floats idea of a digital yen
Japan has become the latest country to look at issuing its own digital currency in a bid to compete with China, which is well under way in developing its digital yuan.
Parliamentary vice minister for foreign affairs Norihiro Nakayama tells Reuters that a digital yen would put Japan in tune with global changes in financial technology – namely the developments made by private companies such as Facebook’s Libra, as well as the developments made by China in creating a state-owned digital currency.
“China is moving toward issuing digital yuan, so we’d like to propose measures to counter such attempts,” says Nakayama.
It is understood that a group of 70 Liberal Democratic Party lawmakers are working on a proposal for Japan to be able to issue its own digital currency, which could be a joint initiative between the government and private companies, Nakayama explains.
He sees issuing a digital yen as “the first step” in Japan becoming aligned with the advances in financial technology. The group of party lawmakers plans to submit its proposal to the government as early as next month according to Nakayama.
The news of a proposal for a digital yen comes as the Central Bank of Japan (BOJ) teams up with fellow central banks in Europe and Canada to assess the “potential cases” for a central bank digital currency (CBDC) in each of their countries.
Japan’s Prime Minister Shinzo Abe also told parliament last Friday that the government will work with the BOJ to study digital currencies and find ways to adapt the yen into a digitally-acceptable format.
As central banks feel the pressure to develop CBDCs in their respective countries, Facebook’s Libra seems to be hitting more road blocks. UK telco Vodafone became the eighth member of the association to walk out, following Visa, MasterCard, PayPal, eBay, Stripe, Mercado Pago and Booking Holdings last October.
Despite this, the association released the following statement: “Although the makeup of the association members may change over time, the design of Libra’s governance and technology ensures the Libra payment system will remain resilient.”