Japan has a unique economy. It contains large manufacturing, exporting automobiles and electronic goods. This nation is most of the time considered as the largest and most innovative in the world. With the recent rise of Chinese and South Korean manufacturing, This country has begun to focus more on high-tech and precision goods.
The Finance minister and central bank governors have already discussed cryptocurrency regulations at the G-20 summit and Japan is taking notice at home. Leaders of the Bank of Japan (BOJ), Ministry of Finance(MOF), and Financial Service Agency (FSA) have done a number of meetings to understand if the country should take the next line to adopt a government-sanctioned digital currency.
How does the Japanese government embrace a central bank digital currency, and would that impact the world economy? Those are the questions everyone is asking right now. Despite the rise of countless crypto exchanges, the US dollar continues to be the de facto of the global currency.
Japan is the birthplace of cryptocurrency, And yes, this country has always been ahead of the global pack when it comes to making use of blockchain technology. The economy might benefit if Japan will adopt a digital currency, but since other countries are facing many financial crimes, hacking, and money laundering Japan is at the results of the currencies becoming more widespread. They know that research is needed. Japan is advancing the studies of the technical and legal perspectives so that they would be able to move in an appropriate way when there will be growing use of technology.
Discussions in Japan are fueled by developments abroad. The Bank of China began a two-year pilot program to try digital yuan transactions, but they have added that digital currency in China would never replace the yuan.
In March, the deputy governor at The Bank of Japan(Boj) asserted that Advanced economies such as Japan’s don’t need a digital currency. Central bank digital currency could greatly benefit developing countries like Cambodia, which have “immature” payment styles. But for advanced economies, the cost of making this work will outweigh the benefits. He also added that at this point, to implement new steps to ensure people’s access to central bank money is not safe, and they can’t just jump into new technologies.
If Japan introduced a digital yen, the central bank could also become the only source of the whole country’s transaction information. Based on the examples provided from Axiory broker as well as several other official sources, the Japanese yen is the third most commonly traded currency in the world after the US dollar and the Euro. That is because of Japan having the third-largest national economy in terms of nominal GDP. The yen, which investors typically snap up as a safe haven in times of financial market crisis, is falling nearly 10 percent against the dollar. During a coronavirus outbreak, the Japanese yen is dropped. The policymakers fear fiscal laxity could lead to a Freefall for the currency.
To be sure, Japan – the world’s biggest creditor – is unlikely to face the kind of sharp capital outflow suffering from emerging economies. Investors are already panicking. They are hoarding dollars, not usually used yen.
As for now, Japan is safe. Now hovering around 110 to the dollar is comfortably above the 120 level of the policymaker’s line. But still, Japan’s huge debt pile and an economy which is already a little bit vulnerable, no one knows how things will turn out.
Climate for now
The dollar was formed around ¥106.20 in Tokyo trading Friday, amid the absence of strong trading incentives.
After dropping to around ¥106 in overseas trading, reflecting a fall in U.S. stock prices, the dollar lost its price throughout ¥106.10. On the morning of Tokyo trading. The U.S. currency is continued to move within a narrow range this afternoon, amid a lack of fresh trading incentives.