Even with legitimizing Bitcoin for commerce, Japan wants to replace cash with its own cryptocurrency
With money velocity in Japan’s economy at excruciating lows, the government decided a few months ago to allow a private cryptocurrency to proliferate in commerce.¬† But even with the acceptance of Bitcoin in their general economy, Japan is seriously looking at creating its own sovereign crypto to replace the people’s reliance upon cash.
Authorities in Japan are considering starting a digital currency to be called the J-Coin. By doing so, Tokyo will reduce cash circulation in the country.
“The project is in the early stages, and we have just held study meetings with other institutions,”¬†a spokesperson for Japanese bank Mizuho Financial Group told CNBC on Wednesday.
“This will be pegged with Japanese Yen, and hopefully used to make payments and transfers through a mobile phone app,”¬†the bank said.
According to a report by the Financial Times, a consortium of Japanese banks are working on the project, and they are interested in launching the J-Coin before the Tokyo Olympics in 2020.
The project has the support of the central bank and regulators. The J-Coin will allow Japanese consumers to pay for goods and services with their smartphones.
The government’s goal is to cut dependence on cash, which represents 70 percent of all transactions by value in Japan. The J-Coin will be exchanged at a one-to-one rate with the yen. –¬†Russia Today
By eliminating cash and moving their currency as much as possible into a digital form, the Japanese central bank can continue to print money well beyond the nation’s current 255% debt to gdp ratio, while at the same time trying to limit the fear of creating too much price inflation because of monetary expansion.
Rather than dedicating monetary policies towards growing the economy, the Bank of Japan has instead used its printing press to buy assets and keep their banks with ample liquidity.¬† But these policies have of course led to 25 years of stagnant growth, and the hope is now that changing their currency from physical to digital will provide the catalyst needed to avoid a Depression should the central bank ever have to undertake declining their balance sheet.
Kenneth Schortgen Jr¬†is¬†a writer for¬†The Daily Economist,¬†Secretsofthefed.com,¬†Roguemoney.net, and¬†Viral Liberty, and hosts¬†the popular¬†youtube podcast¬†on Mondays, Wednesdays and Fridays.¬†Ken can also¬†be heard Wednesday afternoons giving an weekly economic report on the¬†Angel Clark radio show.