70 lawmakers from Japan’s ruling Liberal Democratic Party are prepared to release their proposals to issue cryptocurrency tomorrow.
February 6, 2020, | AtoZ Markets – Japan seems to be emulating China in the race to make a digital yuan, as well as Facebook’s Libra. The country’s lawmakers will reportedly release drafted proposals on Friday. The proposals are for the creation of their own central bank digital currency (CBDC).
Japan is rushing to keep up with China’s cryptocurrency
Japan initially became interested in issuing a digital currency after China announced plans to leverage the blockchain technology to launch a digital yuan last year. The country believes that China’s intention is a challenge for the existing reserve currency and international settlement system.
Japan sees China as a competitor. They fear that the digital yuan, if launched, coupled with China’s 1.4 billion population, could become the standard within the digital economy. China is already the world’s second-largest economy in terms of annual GDP.
Hence, Japan’s move to create its own cryptocurrency is a supposed measure to counter the potential influence of China’s upcoming digital currency.
Norihiro Nakayama, a member of Japan’s ruling party, said that the proposals will help to pave the way for the use of cryptocurrency in the country. However, this does not mean that Japan would be launching its cryptocurrency anytime soon due to legal and technical challenges.
BoJ to partner with the US
Nakayama is the Vice Minister for foreign affairs and one of the lawmakers who drafted the proposals. He said they would need to work with the United States (U.S.) if they must succeed in their plans.
“We sense the digital yuan is a challenge to the existing global reserve currency system and currency hegemony. Without the U.S., we cannot counter China’s efforts to challenge the existing reserve currency and international settlement system,” Nakayama explained.
The Bank of Japan (BoJ) would reportedly partner with six other central banks to research digital currencies. This also includes the Federal Reserve.
The impact of China’s digital yuan is not the only concern for Japan’s policymakers. The country is also among those worried about the controversial Facebook’s Libra. The social media giant has received several backlashes from central banks around the world since Facebook announced plans to launch its digital currency.
Nakayama also reiterated the opinions of Swedish Central Bank chief. He said that Libra is catalytic and has propelled many central banks into considering launching their own digital currency.
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