Japanese lawmakers will offer digital yen.

Xcelpay|3 min read|Feb 20, 2020

Japan ruling party lawmakers to float idea of issuing digital currency.

TOKYO (Reuters) — A group of ruling party lawmakers are working on a proposal for Japan to issue its own digital currency, one of the members said, in a sign of alarm Tokyo is feeling about Facebook’s Libra and China’s drive to create a digital yuan.

The digital currency could be a joint initiative between the government and private companies that would put Japan in tune with global changes in financial technology, Norihiro Nakayama, parliamentary vice minister for foreign affairs, told Reuters.

The group, led by party heavyweight and former economy minister Akira Amari, plans to submit its proposal to the government as early as next month, Nakayama said.

While Japan is unlikely to issue digital currencies any time soon due to technical and legal hurdles, the move comes in the wake of a decision by the Bank of Japan to join six other central banks to share expertise on doing so in the future.

In a sign of increased attention on digital currencies in political circles, Prime Minister Shinzo Abe told parliament that the government will work with the BOJ in studying digital currencies and find ways to enhance the yen’s convenience as a settlement means.

Facebook’s push to launch its Libra cryptocurrency has prodded central banks to quicken the pace at which they look at issuing digital currencies.

Some Japanese lawmakers have voiced concern over Beijing’s move as an attempt to expand the yuan’s use as a settlement currency in emerging economies. Former BOJ board member Takahide Kiuchi, however, said China and Japan have different reasons to consider issuing digital currencies. For China, the motivation is to enhance the yuan’s clout in the global community; for Japan, it would be to change the country’s cash-loving culture, he 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,” he said.

Members of the ruling Liberal Democratic Party of Japan plan to offer the country the issue of its own digital currency. According to Reuters, about 70 MPs from the party believe that the digital yen is necessary to counter the upcoming launches of Libra stable coin and China’s digital currency.

According to Norihiro Nakayama, Deputy Foreign Minister, the initiative to keep Japan at the forefront of innovative technology will be a joint project between the government and the private sector.

The first step in achieving this goal will be the study of the concept of Japanese state cryptocurrency. The ruling party is led by former Minister of Economy, Trade and Industry Akira Amari, who is reported to present a cryptocurrency plan for the government next month.

This initiative is contrary to the opinion of the country’s central bank. In July last year, an official representative of the Bank of Japan ruled out the use of cryptocurrencies of the central bank, because for this the country would need to abandon the use of cash. In addition, in December, the head of the Central Bank Haruhiko Kuroda (Haruhiko Kuroda) said that the country has no demand for state digital currency.

Nevertheless, the Central Bank of the country, apparently, continues to keep abreast. Earlier this week, the central banks of Canada, the United Kingdom, Japan, Sweden and Switzerland, the European Central Bank (ECB) and the Bank for International Settlements (BIS) created a task force to jointly research state digital currencies.

In addition, according to Reuters, Prime Minister Shinzo Abe (Shinzo Abe) said in parliament that the government will work with the Bank of Japan to study digital currencies and ways to improve the effectiveness of the yen as a means of settlement.

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