A group of politicians in Japan’s ruling Liberal Democratic Party (LDP) are planning to hand a proposal into the government next week saying that Japan should prepare to issue digital yen and bring the matter up as a topic at this year’s G7 meetings in a bid to counter China which has said its digital yuan is almost ready.
The group advocating for the digital yen is led by Akira Amari, a former economy minister. Commenting on the proposals he 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? Japan should work in close coordination with the United States. As part of such efforts, we should ask the United States to set [digital currencies] on [the] G7 agenda as chair.”
The announcement by the grouping comes after a U.S. Federal Reserve Governor, Lael Brainard, revealed that the Fed is “conducting research and experimentation” on distributed ledger technologies and their use case for digital currencies. Given the development in the U.S., it’ll very possibly agree to Japan’s request to discuss the topic of digital currencies during the G7 summit which is scheduled for June in the United States.
While the need for Central Bank Digital Currencies (CBDCs) is being increasingly realised, most countries, aside from China, are still in the preliminary stages of developing their own CBDCs. Given the amount of progress so far, we should not expect to see the U.S. or Japan release a digital currency any time soon.