TOKYO (Reuters) – Japan should prepare to issue digital currencies and propose bringing up the topic at this year’s G7 meetings to counter China’s move toward issuing a digital yuan, a group of ruling party lawmakers said on Friday.
FILE PHOTO: Akira Amari, Japan’s Minister for Economic Revitalization and Minister for Economic and Fiscal Policy, addresses the session ‘Japan’s Future Economy’ during the annual meeting of the World Economic Forum (WEF) in Davos, Switzerland January 23, 2016. REUTERS/Ruben Sprich/File Photo
The group will present the proposal to the government next week, its leader Akira Amari, a Liberal Democratic Party (LDP) heavyweight and former economy minister, told reporters.
While Japan is unlikely to issue a digital currency any time soon due to technical and legal hurdles, the move underscores growing pressure Tokyo is feeling in keeping pace with advances China has made toward issuing a digital yuan.
Japan should liaise with the United States to share information and conduct technical studies on digital currencies, the group’s proposal said.
“We live in a stable world led by dollar settlement. How should we respond if such a foundation collapses and if (China’s move) gives rise to a struggle for currency supremacy?” Amari told the group’s meeting to finalize the proposal.
“Japan should work in close coordination with the United States,” he said. “As part of such efforts, we should ask the United States to set (digital currency) on G7 agenda as chair.”
Some Japanese lawmakers feel that China’s planned digital currency could spread widely among emerging economies and potentially threaten the dollar’s hegemony – which would bode ill for Japan as it relies heavily on dollar-based settlement.
The United States is this year’s chair of the Group of Seven advanced economies’ meetings.
Central banks across the world have quickened the pace at which they are looking at issuing their own digital currencies, also known as CBDCs.
Facebook’s push to launch its Libra cryptocurrency has raised questions over whether nation states will continue to control money in the decades ahead.
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.
The Bank of Japan has undertaken a joint research project with the European Central Bank, but has said it has no plans to issue CBDCs in the near term.
Reporting by Tetsushi Kajimoto and Yoshifumi Takemoto, writing by Leika Kihara; Editing by Tom Hogue and Michael Perry