Japan’s largest banks will be looking into the potential benefits of using electronic money and digital currencies in order to make banks and cashless payments systems interoperable.
The initiative has been launched by Japan’s Mitsubishi UFJ Financial Group, the world’s fifth-largest bank in terms of total assets (appr. $2.5 trillion); Mizuho, the third-largest financial services company in Japan with around $1.8 trillion in assets; and Sumitomo Mitsui Corporation Group, a multinational banking, and financial services institution based in Tokyo.
All three banks will establish a consortium this month with local cashless payment service providers in order to determine how to make their services more efficient and interoperable.
The consortium will be led by Hiromi Yamaoka, the former head of the payment and settlement systems department at Japan’s central bank.
At present, each cashless payment service in Japan requires that users use a different application on their mobile phones or carry a smart card to conduct transactions, however, users can’t transfer money between separate apps and cards.
Kyodo News reported that the initiative will look into how e-money and digital currency can be used to issue a “digital yen.”
Although the Bank of Japan (BOJ) confirmed that it doesn’t plan to issue a virtual currency, it has been performing various feasibility studies with the help of the European Central Bank (ECB) and several other reserve banks.
Other Japanese organizations that may take part in studying digital currencies include the East Japan Railway, which issues Japan’s Suica IC prepaid electronic money card; KDDI Corp, a mobile phone service operator; NTT Group, a major telecommunications company in Japan; and Seven Bank, a division of retail firm Seven & i Holdings Co.
DeCurret Inc, which is working on a settlement platform for virtual currency, plans to serve as the research group’s secretariat.
The BOJ, the Financial Services Agency (FSA) and the Ministry of Economy, Trade and Industry (METI) will also take part in the study, but only as observers.
The researchers will be submitting their proposals later this year, and they will be formally presented to the Japanese government and the nation’s central bank.
Taro Aso, the Japanese finance minister, recently noted that he’d be unwilling to support legislation that would treat digital currencies as regular income like that generated from stock dividends.
Aso said that he would not want to support laws that would tax income generated from digital currencies, because many Japanese households don’t really have access to these types of investments.
The minister’s statements came during a recent meeting of the House of Councillors Committee on Financial Affairs.
DeCurret, a Japanese digital asset exchange, is also involved in the study.
“In recent years, expectations have been growing about the efficiency and convenience of digital currency settlements befitting digital society against backdrops such as businesses issuing digital currencies using distributed ledger technology and actions taken by some central banks.”
“At the same time, concerns are emerging over issues including privacy protection, crime prevention measures, and technology risks. These have resulted in the needs for a direction for the realization of valuable digital currencies in Japan.”