Japan has issued newly designed banknotes for the first time since 2004, a move that could give a small boost to the economy while encouraging some money collectors to invest money instead of hiding it under the mattress.
The Bank of Japan shipped the first bundle of newly designed banknotes on Wednesday. The new ¥10,000 ($62) banknotes feature a portrait of Eiichi Shibusawa, seen as the father of Japanese capitalism.
While the move to keep counterfeiters and tax evaders in the background appears to be at odds with the growing popularity of cashless transactions by consumers and businesses, central bank and finance ministry officials continue to point to the continued importance of paper money .
“Despite the trend toward cashless payments, cash is a secure means of payment that can be used by anyone, anywhere, at any time, and it will continue to play an important role,” Kazuo Ueda, governor of the Bank of Japan, said Wednesday morning. echoing Finance Minister Shunichi Suzuki’s comments the previous day.
Prime Minister Fumio Kishida reiterated this point and the improved security of the new banknotes during a press conference on Wednesday to commemorate the launch of the new banknotes.
“I hope they will be loved by the Japanese and at the same time add a spark to the economy,” Kishida said at the BOJ.
After a slow start, cashless transactions responsible for 39% of all transactions in Japan by 2023, which has steadily increased over the past decade, according to the Ministry of Economy. That means Japan is catching up with other countries in the adoption of cashless payments, although it still lags behind South Korea and China, where more than 80% of payments have already taken place. executed cashless in 2020, the ministry said.
The introduction of the notes is expected to have an impact of more than 1.5 trillion yen on the country’s economy, boosting gross domestic product by about a quarter of a percentage point, said Takahide Kiuchi, executive economist at the Nomura Research Institute and a former bank. board member of Japan.
The impetus comes from the investments required to update various systems, from ticket machines to ATMs. At the same time, modernizing equipment will also put pressure on some small businesses, given the lack of government subsidies to help them.
Suzuki said nearly 80-90% of electronic cash registers and ticket machines are expected to be compatible with the new bills from the start, while only about 30% of machines would be ready.
Some analysts also point to the potential for some savers to change their behavior.
Decades of deflation and rock-bottom bank interest rates have pushed Japanese households to hold relatively large amounts of their savings in cash.
Families kept one estimated According to Hideo Kumano, executive economist at the Dai-Ichi Life Research Institute, there was ¥60 trillion in banknote savings at the end of last year.
When new banknotes have been introduced previously, many money collectors have chosen to replace old banknotes with new ones. This time, they may be encouraged to start investing the money instead, as the rise of the strongest inflation in decades means money stuffed under the mattress will simply lose value in the future.
“I think this will cause positive movements, such as more investments, bank deposits or consumer spending,” said Eiji Kinouchi, chief technical analyst at Daiwa Securities. “The key is whether real interest rates remain low.”
