Japan's senior lawmaker and deputy foreign affairs minister Norihiro Nakayama said that Japan needs to strengthen cooperation with the United States to resist the potential impact of the central bank's digital currency that China plans to use.
According to Bloomberg, Nakayama plans to release a digital currency proposal on Friday, and he hopes that the Federal Reserve will work with six other central banks, including the Bank of Japan, to research digital currencies.
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"We believe that the digital yuan poses a challenge to the existing global reserve currency system. Without the United States, we cannot resist China's efforts to challenge the existing reserve currency and international settlement system," Nakayama said.
His comments suggest that Japanese policymakers are increasingly worried about the possible impact of digitizing the yuan. China's central bank digital currency program and Facebook's Libra crypto project have prompted central banks around the world to accelerate their understanding of digital currency functions and impacts.
Nakayama said, "China has a population of 1.4 billion, so within the digital economy framework of the Belt and Road Initiative, the digital renminbi is likely to become the standard in the digital economy."
He also pointed out that China already has a great influence in Africa, and Japan needs to ensure that it has the technical knowledge and capabilities to meet the challenges before the digital yuan is widely circulated in Africa.
Hiromi Yamaoka, former head of the Bank of Japan's financial solutions, also expressed concern that he was worried that Japan might use the digital currency to enhance its position. Yamaoka said, "China is a competitor. If the renminbi is used more widely than the yen, it will cause Japan's economic strength and influence to decline in the medium to long term."
He also believes that Libra is also a catalyst for the central bank to take action to explore the possibility of its own digital currency, because Libra may make the central bank's monetary policy no longer useful.
This week, Fed Governor Lael Brainard also stated that he is studying the potential of the United States to launch digital currencies. He mentioned, "Given the important role of the US dollar, it is important that we remain at the forefront of central bank digital currency related research and policy development. "
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By Liang CHE
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