The Bank of Japan’s Push for Digital Currency
The Bank of Japan is urging the country to accelerate its transition towards digital currency to further facilitate the shift towards a cashless economy. Japan has traditionally relied heavily on cash transactions; however, government statistics indicate that cashless payments surged to 42.8% in 2024, a significant leap from just 13.2% in 2010. This figure surpasses the government’s target of 40% one year ahead of schedule.
Current Challenges and Future Prospects
Despite this progress, Japan’s payment technologies still trail behind many other nations. The rise in cashless transactions is prompting policymakers to remain proactive in adapting to evolving consumer preferences regarding payment methods. One potential approach is the introduction of central bank digital currencies (CBDCs).
Kazushige Kamiyama, an executive director at the Bank of Japan, noted that while the demand for banknotes remains steady for now, their usage is projected to decline significantly as digitalization accelerates.
Ensuring a Resilient Payment System
Kamiyama emphasized the need for Japan to explore measures to ensure its retail payment systems are not only user-friendly and efficient, but also secure and resilient moving forward.
Additionally, Shinichi Uchida, deputy governor of the Bank of Japan, pointed out that CBDCs could play a vital role in enhancing the future landscape of Japan’s payment and settlement systems; however, he also highlighted that a strong demand for cash is likely to persist in the near future.
