More than 30 major Japanese firms will begin experiments next year towards issuing a common, private digital currency to promote digitalization in one of the world’s most cash-loving countries, the group’s organizing body said on Thursday.
The move follows the Bank of Japan’s recently announced plan to experiment with issuing a digital yen, underscoring a growing awareness of the need for Japan to catch up to rapid global advances in financial technology.
The group, consisting of Japan’s three biggest banks as well as brokerages, telecommunication firms, utilities and retailers, will conduct experiments for issuing a digital currency that will use a common settlement platform.
“Japan has many digital platforms, none of which are big enough to beat cash payments,” Hiromi Yamaoka, a former BOJ executive who chairs the group, told an online briefing.
“We don’t want to create another silo-type platform. What we want to do is to create a framework that can make various platforms mutually compatible,” Yamaoka said.
Private banks will be in charge of issuing the digital currency in the experiments, though the possibility of other entities issuing a digital yen will not be ruled out, he said.
Japan has among the most cash-loving people in the world, with cashless payments making up only 20% of total settlement – well below the United States, with 45% and China with 70%.
Authorities have been keen to promote cashless transactions to increase productivity, though progress has been slow partly due to the inconvenience of digital payment.
Various digital platforms compete and remain incompatible with one another in Japan unlike in China, where a handful of huge platforms dominate the market.
Japan’s three megabanks – Mitsubishi UFJ Financial Group Inc, Mizuho Financial Group Inc and Sumitomo Mitsui Financial Group Inc – have eached rolled out their own digital payment systems. But they lag efforts by tech firms such as SoftBank Group unit PayPay.
(Reporting by Leika Kihara; Editing by Simon Cameron-Moore)