Issuing a national digital currency proposed by Japanese lawmakers

According to a report published by Reuters, the Liberal Democratic Party of Japan has proposed issuing a national digital currency. The 70 lawmakers in the party have argued that the measure is needed to combat Libra and the digital yuan. The ruling party’s group is led by former Minister of Economy, Trade and Industry Akira Amari.

The effort is meant to keep Japan at the forefront of fintech innovation, and the plan will be discussed by the government next month. The initial stage would be to research the prospects for issuing the digital currency.

Parliamentary Deputy Minister for Foreign Affairs Norihiro Nakayama said:

“China is moving towards issuing digital yuan, so we would like to propose measures to combat such attempts.”

The initiative seems to counter the view of the country’s central bank, which said in June last year that issuing a digital yen would mean lowering cash.

“Eliminating cash would make the settlement infrastructure inconvenient to the public, so no central bank would do that,”

At that time, Masayoshi Amamiya, the deputy governor of the Bank of Japan, said.

The issuance of a national digital currency enters the analysis

However, the Bank of Japan joined five other banks to form a new CBDC working group. Together with the International Settlement Bank (BIS), banks intend to investigate potential cases for digital currencies issued by central banks.

Former member of the Bank of Japan’s board of directors, Takahide Kiuchi, said:

“The best way could be to issue a hybrid digital currency that is operated and issued by private companies, with the involvement of the central bank.”

Prime Minister Shinzo Abe told parliament that the government will cooperate with the central bank in its efforts. The main purpose is to identify the ways of improving the yen as a means of settlement.

Following the announcement of the Libra project launched by Facebook last summer, Japanese regulators have expressed concern about the potential risks of this stable cryptocurrency. Shortly after, the country formed a working group before a G7 meeting in France to discuss the situation.