Japan has issued banknotes with a brand new design for the primary time since 2004. This could give the economy a small boost and possibly encourage some money hoarders to speculate their money as a substitute of keeping it under the mattress.
The Bank of Japan delivered the primary batch of newly designed banknotes on Wednesday. The latest 10,000 yen (US$62) bills feature a portrait of Eiichi Shibusawa, who was Father of Japanese capitalism.
While the move, designed to maintain counterfeiters and tax evaders at bay, appears to contradict the growing popularity of cashless transactions amongst consumers and businesses, central bank and finance ministry officials proceed to emphasize the continued importance of paper money.
“Despite the trend toward cashless payments, cash is a safe means of payment that can be used by anyone, anywhere, anytime, and it will continue to play a significant role,” Bank of Japan Governor Kazuo Ueda said on Wednesday morning, echoing Finance Minister Shunichi Suzuki’s comments yesterday.
Prime Minister Fumio Kishida reiterated this point and the improved security of the brand new banknotes at a press conference on Wednesday to mark the introduction of the brand new banknotes.
“I hope they will please the Japanese people and at the same time give new impetus to the economy,” Kishida said on the BOJ.
After a slow start billed for 39% of all transactions in Japan in 2023, a figure that has been steadily increasing over the past decade, based on the Ministry of Economic Affairs. This implies that Japan is catching up with other countries within the adoption of cashless payments, even though it still lags behind South Korea and China, where greater than 80% of payments were already cashless. carried out According to the ministry, cashless payments will probably be introduced in 2020.
The introduction of the banknotes is anticipated to have an effect of greater than 1.5 trillion yen on the country’s economy and increase gross domestic product by a few quarter of a percentage point, says Takahide Kiuchi, an economist on the Nomura Research Institute and former board member of the Bank of Japan.
The upturn is on account of the investments needed to modernise various systems, from ticket machines to ATMs. At the identical time, upgrading the equipment will even put a strain on some small businesses as they lack government subsidies.
Suzuki said that 80 to 90 percent of electronic money registers and ticket machines at train stations are expected to be compatible with the brand new notes from the beginning, while only about 30 percent of vending machines will probably be.
Some analysts also indicate that there’s a possibility of a change in behavior amongst some savers.
Decades of deflation and rock-bottom bank rates of interest have led Japanese households to maintain relatively large portions of their savings in money.
Families held a estimated According to Hideo Kumano, senior economist on the Dai-Ichi Life Research Institute, savings in banknotes amounted to 60 trillion yen at the tip of last 12 months.
When latest banknotes were introduced, many money hoarders decided to switch old banknotes with latest ones. This time, they might be encouraged to speculate the cash as a substitute, because with inflation at its highest in a long time, the cash hoarded under the mattress will simply lose value in the long run.
“I think this will trigger positive developments such as higher investments, bank deposits or consumer spending,” said Eiji Kinouchi, chief technical analyst at Daiwa Securities. “The key is whether real interest rates remain low.”
