Japan should create its digital currency within 2-3 years, says a senior lawmaker

A senior lawmaker from Japan’s ruling Liberal Democratic Party has said that the country should create its own digital yen within the next 2-3 years.

“The sooner the better. We’ll draft proposals to be included in government’s policy guidelines, and hopefully make it happen in two-to-three years,” Kozo Yamamoto told Reuters on Monday. The lawmaker’s remarks highlight the pressure Japan feels against China’s progress on digital currency.

Last month, another group of Japanese lawmakers, led by former economy minister Akira Amari, said that they are working on a proposal to issue digital currency. Yamamoto today said he would work with Amari to push the government to adopt their proposals.

Japan wants to curb the potential influence of China’s upcoming digital yuan. Norihiro Nakayama, a lawmaker from Japan’s ruling party, recently said that China’s digital currency is “a challenge to the existing global reserve currency system and currency hegemony” and that Japan would need U.S. support to counter China’s efforts.

The Bank of Japan, the country’s central bank, has started initiatives to research digital currencies. Last month, it joined hands with five other major central banks - the Bank of England, the Bank of Canada, the European Central Bank, the Sveriges Riksbank (Sweden) and the Swiss National Bank - to explore digital currencies.

"If each country manages to control flows of money with their own (digital) currencies, that could prevent a big swing at a time of crisis and stabilize their own economy," Yamamoto said today.