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According to a report dated January 24th, 2020, members of the Japanese parliament are developing a proposal for a Japanese National Digital Currency. One lawmaker said the proposal is an attempt to counter China’s soon-to-be released digital yuan. Others claim China and Japan have entirely separate motivations for developing a digital currency.
Japan’s Potential National Digital Currency Explained
Last week, Bank of Japan — the country’s central bank — joined a group of five other central banks who agreed to explore central bank digital currencies (CBDCs) and share their findings amongst each other. The news is believed to mark the first public announcement regarding Japan and a national digital currency.
Just a few days later, a group of Japanese lawmakers have announced an upcoming proposal for Japan’s very own digital currency. According to one of the legislators, Japan is feeling pressure from both China’s national digital currency — DCEP — and Facebook’s Libra.
The developing proposal could feature a collaboration between the Japanese government and private companies. It is said to have the aim of aligning Japan with global FinTech trends.
According to parliamentary vice minister for foreign affairs Norihiro Nakayama,
“The first step would be to look into the idea of issuing a digital yen…China is moving toward issuing digital yuan, so we’d like to propose measures to counter such attempts.”
Nakayama says the proposal could be submitted to the Japanese government as early as February 2020. Akira Amari, a former minister of economy in Japan, leads the group of policymakers developing the proposal.
Will China and Japan Develop Competing National Digital Currencies?
According to existing law, cryptocurrencies are illegal in China. Once China’s digital currency — DCEP — is rolled out, it will constitute the only legal digital currency in the country.
Little details are known about the currency. China has publicly researched digital currencies since 2014 however, and some sources say DCEP could launch anytime in the near future. Once launched, China has additional plans to implement blockchain technology, including a regulatory framework for Security Token Offerings (STOs).
DCEP is pegged 1:1 to China’s national currency, the yuan (CNY). China has publicly criticized digital assets which are not issued by governments or central banks, to include Libra, claiming they ‘threaten the sovereignty of China’ and other economically developing nations.
This is where the motivation for developing a digital currency could differ between China and Japan. According to Bank of Japan board member Takahide Kiuchi, China wants to digitize the yuan to boost the yuan’s reputation across the globe. In Japan, the primary motivation would revolve around a change to the country’s financial culture, where cash remains at the forefront.
What do you think about the Japanese government developing a proposal for a national digital currency? We want to know what you think in the comments section below.
Image courtesy of Taiwan News.