Lawmakers from Japan’s ruling party are working on a proposal which would see the nation issue its own digital currency, Reuters reported on 24 January.
According to the Friday report, around 70 members of Japan’s Liberal Democratic Party feel that the upcoming Chinese digital yuan needs to be countered by their own digital currency. The group is led by the former Minister of the Economy, Trade and Industry, Akira Amari, and is planning to submit the proposal to the government sometime in February.
Like many similar initiatives around the world, the Japanese government is planning to jointly develop the digital yen with the help of private companies. Reuters further reported that Japan’s Prime Minister, Shinzo Abe, told the parliament that the government will work with the Bank of Japan (BoJ) on examining digital currencies, and on finding ways to enhance the yen’s convenience as a settlement means.
Takahide Kiuchi, former BoJ board member, reportedly said:
“The BOJ probably won’t 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.”
The new initiative seems to counter what the BoJ stated back in April 2018, when the bank said that it had no intention to issue a Central Bank Digital Currency (CBDC) to consumers, as it could undermine the existing two-tiered system and affect financial stability. Last June the bank also stated that issuing a digital yen would mean dropping cash.
Nevertheless, the bank seems to be keeping an open mind as of late. Earlier this week, it joined five other banks in creating a working group with the Bank of International Settlements, with the goal of sharing experiences and study the potential use cases for CBDCs.