A group of ruling party lawmakers are working on a proposal for Japan to issue its own cryptocurrency, 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 first step would be to look into the idea of issuing a digital yen,” said Nakayama, a key member of the group comprised of about 70 Liberal Democratic Party lawmakers.
“China is moving toward issuing digital yuan, so we’d like to propose measures to counter such attempts,” he said on Thursday.
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 on Friday 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.
Of the major central banks, China’s has emerged as the frontrunner in the drive to create its own digitized money, though details of its project are still scarce.
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.
Finance Minister Taro Aso said earlier this month that it would be a “very serious problem” if digital yuan becomes a popular means for international settlement, as Japan settles transactions mostly in dollars.
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.