Japanese lawmakers are working on a proposal for the country to issue its own digital currency, according to a report in Reuters Friday. A digital yen could be a collaboration between the government and private companies, a key lawmaker in the country told Reuters Thursday.
“The first step would be to look into the idea of issuing a digital yen,” Norihiro Nakayama, Japan’s parliamentary vice minister for foreign affairs, told the outlet. He noted that China is moving toward a digital yuan and added that “We’d like to propose measures to counter such attempts.”
Nakayama is a member of the Liberal Democratic Party lawmakers. The ruling party has around 70 members and is led by the former economy minister, Akira Amari. Nakayama said the group plans to submit its proposal to the government as soon as February, according to the report.
The move comes days after a decision by the Bank of Japan to join a working group of five other central banks and the Bank for International Settlements, an international financial institution owned by central banks, to explore use cases for CBDCs.
Ever since Facebook announced last year its intentions to launch its Libra cryptocurrency, central banks around the world have been rushing to seriously investigate issuing their own CBDCs.
China, which started working on a digital yuan five years, ago aims to be the first advanced economy to launch a CBDC. The People’s Bank of China recently said it’s completed the top level design of its digital yuan, though it’s still keeping most of the details under wraps.
Japan is a rare laggard in Asia, where other countries are hurtling toward a cash free future. Nevertheless, the Japanese government is determined to promote cashless payments and has set a policy target to double the amount of cashless settlements to 40% by 2025.
That still leaves Japan far behind other countries such as South Korea and China, each with a higher rate of cashless transactions, totaling 90% and 60% respectively.
(Updated on Jan. 26, 2020 at 3 p.m. A previous version of this story stated that Japan legislators were calling for a CBDC. It is a prickly point, but in fact, they are not calling for a CBDC, but a state-backed digital currency.)