Japan’s Liberal Democratic Party urges the Government to consider digital currency options

According to a report from the Nikkei newspaper, policymakers (led by chairman Akira Amari) for Japan’s ruling Liberal Democratic Party put forward a proposal urging the government to prepare to issue a digital currency. The lawmakers will be handing the proposal over to Prime Minister Shinzo Abe soon.

The Bank of Japan announced on January 20 that it has established a research team to look at issuing a central bank digital currency (CBDC) primarily from key central banks. Aside from the Bank of Japan, five other banks, including the Bank of Canada, Bank of England, European Central Bank, Sveriges Riksbank (Swedish Central Bank), and Swiss National Bank, are members of the Bank for International Settlements, which has established a group for the purpose of sharing knowledge and research on CBDCs.

Mr. Amari has expressed concern over the possibility of a swift diffusion of the “digital renminbi” that is being proposed by the Central Bank of China. Should international trade tied to the Chinese renminbi increase, the power of US economic sanctions could weaken due to the suspension of trade pegged to the US dollar. Mr. Amari points out that “this (scenario) would have a significant impact on Japan’s security.”

The proposal states that “countermeasures that digitize key currencies including the Japanese yen to maintain the core system with the US dollar as the axis,” and goes on to say that lawmakers “strongly request that the government and Bank of Japan ‘partner with overseas banking authorities in responsive measures including the digitalization of the Japanese yen, to swiftly investigate and prepare for this issue.’”