Japan launched the world’s first stablecoin pegged to the Japanese yen on Monday, seen as an important, if modest, step in a country where citizens still prefer to use cash and credit cards.
Japanese startup JPYC has begun issuing a stablecoin called JPYC, a digital currency that is fully convertible with the yen and backed by domestic deposits and Japanese government bonds.
The company plans to issue 10 trillion yen (about $66 billion) worth of JPYC tokens over the next three years, with ambitions to expand their use beyond Japan. Transaction fees are currently not charged, and the JPYC will be financed by income from interest on government bonds.
“We expect that this model will encourage innovation and enable startups easier access to payment transactions with minimal costs,” said company director Noritaka Okabe, emphasizing the possibility of cooperation with international partners to expand interoperability, reports Financije.hr.
Stablecoins, unlike volatile cryptocurrencies like bitcoin, are tied to real currencies and use blockchain technology for faster and cheaper transactions.
The stablecoin market is currently almost completely dominated by the dollar, which accounts for over 99% of the global supply, according to the Bank for International Settlements (BIS).
However, interest in stablecoins is also growing outside the US: the three largest Japanese banks have announced the joint launch of a digital currency tied to the yen, and similar initiatives have been announced in South Korea and China, reports Bankar me.
Former Japanese central bank official Tomoyuki Shimoda warned that the yen stablecoin is unlikely to reach the popularity of dollar variants, but if megabanks enter the market, “development could accelerate significantly in the next two to three years.”
Japan’s central bank, on the other hand, expresses caution, warning that the rapid growth of stablecoins could threaten the traditional banking system and change the global dynamics of payment flows.
