According to Kozo Yamamoto (Head of the Liberal Democratic Party), Japan plans to create Yen Digital Currency. Yamamoto says it is necessary and should be done within two to three years. He will prepare his proposal in collaboration with another official, who is concerned about the impact of the Chinese CBDC.
10 February, 2020 | AtoZ Markets – Central banks around the world have already accelerated the pace to issue central bank digital currencies (CBDCs). Japan is a member of a six-central-bank coalition including the UK, Sweden and the EU. However, Japan appeared to be taking a slow but steady approach to a state-backed digital currency. Japan is expected to create its own digital yen currency, hopefully within two to three years. Moreover, it includes such a plan in mid-year key policy guidelines, a senior official said on Monday.
Japan’s LDP Pushes CBDC Plan
Kozo Yamamoto is the Head of the Liberal Democratic Party (LDP) finance and banking research commission. He confirmed that the threat from companies like Facebook is too great to stay on the sidelines. However, it seems that the ruling party in Japan does not want to wait any longer. Facebook’s pressure to counter central bank digital currencies (CBDCs), and China’s progress on its digital RMB, has caused panic in Japan. Yamamoto said:
The sooner, the better. We will write proposals to be included in the government’s policy guidelines. We hope that this will be done in two or three years.
Japan also said it was waiting for the input of the US. They would be unable to “counter China’s efforts to challenge the existing reserve currency and the international settlement system” without the help of the US. Yamamoto said he would work with Akira Amari to push the government to adopt their proposals. Akira Amari is the former economy minister and member of the ruling party.
Urgent Development of Digital Yen to Counter China
Japan has moved up a gear. Yamamoto’s commentary on Libra comes at a time when other lawmakers in the country echo his concerns. Japan is unlikely to issue digital currency soon due to technical and legal issues. But ongoing efforts highlight Tokyo’s pressure on China and Facebook’s progress in digital currencies.
Among the major central banks, China’s is the first to want to create its own digital currency. But details of its project are still scarce. Many senior officials believe that if China’s digital currency is not controlled, it will advance the country’s digital hegemony on the world stage. It could also use to dethrone the dollar as the world’s leading currency.
The spread of digital currencies could undermine the supremacy of the dollar. But it could help stabilize emerging markets like Cambodia, which is highly dependent on the dollar. However, Japan remains somewhat optimistic about the possibility for each country to avoid future crises in their economy. Mr. Yamamoto said:
If each country manages to control monetary flows with its own digital currencies, this could avoid a big wave at a time of crisis and stabilize its own economy.
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