Ruling party lawmakers in Japan are reportedly working on a proposal to issue a national digital currency, Reuters reports on Jan. 24. This appears to be a response to fears of a Chinese digital yuan.

The planned digital yen would be jointly developed by the government and individual companies, and would follow many similar initiatives around the globe.

The proposal is worked on by a parliamentary group comprised of lxx Liberal Democratic Party lawmakers. The grouping plans to submit the proposal to the government some time in February.

Deploying the digital yen will have some fourth dimension due to Japan's late start. The decision represents a primal change for the country, whose primal bank representatives saw "no demand" for a primal bank digital currency (CBDC) as tardily every bit Dec 2022.

Libra and yuan fears fuel the decision

The announcement of Facebook's Libra and Communist china's digital yuan pushed central banks around the world to look into issuing their own CBDCs. This was a major give-and-take point at a Globe Economical Forum panel on Jan. 23.

However, each initiative works to solve different problems. Libra is primarily offered equally a global and frictionless payment network, while the digital yuan'southward purpose is to enhance China'due south financial clout, according to former Bank of Nippon board member Takahide Kiuchi.

Japan'due south Finance Government minister Taro Aso expressed fears of the yuan becoming a widespread settlement currency, which may have partially motivated the cosmos of a Japanese CBDC. However, Kiuchi believes that the primary motivation for a Japanese CBDC is to supercede cash. Equally a country that already introduced negative interest rates, the apportionment of cash prevents further expansion of that policy.