Japanese banks are fighting back against the threat from China's Alibaba with plans to introduce their own digital currency in time for the 2020 Tokyo Olympics.
A consortium of banks, led by Mizuho Financial Group and Japan Post Bank, has won support from the country’s central bank and financial regulator to launch the J Coin, an electronic currency to pay for goods and transfer money using smartphones, reports the Financial Times.
The J Coin would be convertible into yen on a one-to-one basis, operating via a smartphone app and using QR codes to be scanned in stores, says the business daily. In return for providing the service for free, the banks would benefit by collecting more data on consumer spending patterns.
“I think this electronic money is quite ahead of [credit and debit] cards, because when you use the cards the shops pay a certain fee,” Yasuhiro Sato, president and chief executive officer of Mizuho Financial Group, told the FT.
Bank of Tokyo Mitsubishi UFJ last year confirmed reports that it is working on plans to create its own digital currency, MUFG Coin, which will be downloaded to smartphones and used for P2P funds transfers and for online shopping.
According to the FT, here have been recent discussions between the top banks about the possibility of MUFG joining the J Coin initiative.
The banks have privately estimated that the new system could add an extra ¥10bn to Japan’s cash-heavy economy by reducing the costs of handling physical notes and coins and cutting settlement fees for retailers and consumers.