Japanese Official Calls for Urgent Development of Digital Yen to Counter China

Another Japanese lawmaker has publicly called for the swift development of the digital yen.

The head of the banking and finance systems research commission at Japan's Liberal Democratic Party, Kozo Yamamoto, said today that the country should create a digital yen in two to three years.

Reuters reported on Feb. 10 that Yamamoto said that plans for its central bank digital currency (CBDC) should be included in the government’s mid-year policy guidelines. He explained that digital currencies could quickly spread in emerging economies and help China — who is working on a CBDC — advance its digital hegemony. Because of this, he said that development of the digital yen must be quick:

“The sooner the better. We’ll draft proposals to be included in government’s policy guidelines, and hopefully make it happen in two-to-three years. [...] If each country manages to control flows of money with their own (digital) currencies, that could prevent a big swing at a time of crisis and stabilize their own economy.”

Yamamoto’s remarks follow those of former economy minister and ruling party member Akira Amari, who said that he wants to issue a CBDC to counter China’s upcoming digital yuan. Yamamoto admitted that, while the spread of CBDCs may undermine the dollar’s supremacy, it could also stabilize emerging markets relying on the dollar such as Cambodia.

Japan’s push for digital currency research

Japanese lawmakers have recently called on their government to push for digital currencies to be placed on the G7’s agenda this year. Furthermore, at the end of January, the deputy governor of the Bank of Japan has said the institution must be ready to issue a CBDC should public demand surge in response to technical developments.

Meanwhile, the central bank of China recently completed the top-layer design and joint testing of the digital yuan.