Japanese banks are working together to introduce a new digital currency ahead of the 2020 Tokyo Olympics.
The currency, called J-Coin, would exist alongside the Japanese Yen and could be exchanged for the traditional currency at a one-to-one rate. Users would access the currency through a mobile app which uses QR codes to operate in stores.
Yasuhiro Sato, president and chief executive officer of Mizuho Financial Group, which is leading development on the currency, told the Financial Times he believes that J-Coin is "quite ahead of [credit and debit] cards, because when you use the cards the shops pay a certain fee.”
J-Coin is also meant to impact the country's heavy use of cash, which accounts for 70 percent of all transactions.
“We like cash, because Japan is a very safety-conscious country, but cash is not so productive so we have to change the structure from cash to electronic money,” added Sato.
It's unclear if the digital currency will be accepted or even successful. Alongside its own development, the Mitsubishi UFJ Financial Group (MUFG) is testing a blockchain-based currency called the MUFG coin, which could affect J-Coin in the future.
While the company has been asked about joining other banks supporting J-Coin, it has responded by saying that it wants "MUFG coin’s results and know-how to be used across Japan, including by other banks, but have not decided on what concrete measures to take.” Over 1,600 MUFG employees currently use the currency to pay for expenses.
It's widely known that banks need to address the impending changes expected to be caused by digital disruption, but if the digital currency is implemented successfully, it could bring an additional ¥10bn to Japan’s economy.
According to MIT's Technology Review, if everything goes well, Japan would join a number of other countries experimenting with cryptocurrencies. Venezuela, for example, is said to be in the midst of shifting to Bitcoin to deal with hyperinflation.
Disclosure: Several members of the Futurism team, including the editors of this piece, are personal investors in a number of cryptocurrency markets. Their personal investment perspectives have no impact on editorial content.