According to a recent Reuters report, Japan’s Parliamentary Vice Minister of Foreign Affairs, Norihiro Nakamaya, confirmed that a group of about 70 lawmakers from Japan’s ruling Liberal Democratic Party are creating a proposal for Japan to issue its own digital currency. The effort comes in response to counter the coming launches of Libra and China’s digital yuan, with the aim of keeping Japan ahead of the changing global financial technology landscape. Specifically, Nakamaya stated that “China is moving toward issuing digital yuan, so we’d like to propose measures to counter such attempts,” and that “the first step would be to look into the idea of issuing a digital yen.”Nakamaya added that the project would be a joint effort between the Japanese government and the private sector, and though it is unlikely that Japan will issue its digital currency in the immediate future, the group of lawmakers plan to present the proposal to government as early as next month.
This news follows Japan’s recent decision to join the central banks of Sweden, Canada, Switzerland, the U.K. and the European Central Bank in an initiative with the Bank of International Settlements (BIS) to share findings regarding potential use cases for central backed digital currencies (CBDCs). In addition, Prime Minister Shinzo Abe told parliament several days ago that the government will be working with the Bank of Japan (BOJ) to study how digital currencies can “enhance the yen’s convenience as a settlement means.” This is in response to measures taken by China as it attempts to establish the yuan as a settlement currency in emerging economies.
Though there is clearly a competition emerging between the two nations, former Bank of Japan (BOJ) board member noted that the two countries have different incentives to consider digital currencies. While China’s motivation lies behind “enhancing the yuan’s clout in the global community,” Japan would issue a digital currency to “change the country’s cash-loving culture.” Regardless, it is clear that we are witnessing the emergence of a critical race amongst some of the world’s most powerful economies to lead the worldwide digital currency movement. Though it is not yet evident who will emerge victorious, there is little doubt that digital currencies are now being advanced by some of the world’s top economic leaders.