EDITORIAL | New Banknotes Remain Valuable Even as Cashless Payments Rise

The Japanese government is introducing its first redesigned banknotes in 20 years. Hopefully, the arrival of the new banknotes will give the public a psychological boost. However, prices are soaring and consumers are keeping a tight lid on spending. Meanwhile, we need to ensure a smooth transition from the old banknotes. 

The 10,000 yen note features the face of Eiichi Shibusawa. Umeko Tsuda is the figure whose face is on the 5,000 yen note. Finally, the 1,000 yen note honors Shibasaburo Kitasato. They were respectively a capitalist pioneer, a female educator who did much for women’s education in Japan, and a microbiologist who was one of the founders of modern medicine in this country. 

This is an excellent opportunity to deepen our understanding of the remarkable achievements of these three individuals. In doing so, we can consider what kind of "Japanese" we should aim to become. 

Burden on Small Businesses

Plans call for 2.95 billion new-style banknotes to be issued during FY2024. They use the latest anti-counterfeiting technologies. However, to accommodate their use, ATMs, ticket vending machines, currency exchange machines and so on will need to be updated. That will result in special demand for the makers of such devices, which in turn should also boost the economy. 

Conversely, the switch will place a huge burden on businesses that need to install the new equipment. Unlike banks and railway companies, businesses with machines selling meal tickets in restaurants, soft drink vending machines, or other such devices have not yet finished preparing for the new banknotes. 

In light of the costs incurred, responses may inevitably vary depending on individual business decisions. But issuing the new banknotes would be pointless if they prove difficult to use. Some local governments are even moving to help subsidize the cost of replacing equipment. We hope that the public and private sectors will do everything possible to quickly accept the new banknotes. 

Avoiding Fraudsters

There is also concern that fraudsters will take advantage of the banknote introduction process. For example, they might claim that the old banknotes can no longer be used and falsely offer to exchange the cash savings people have hidden at home for new banknotes. We must increase our vigilance regarding such scams. 

The Japanese people have a strong attachment to the use of cash which has delayed the spread of cashless settlements. However, the proportion of cashless transactions has risen to around 40% with the government’s recent push for a more "cashless society." Furthermore, the government and the Bank of Japan are considering the introduction of a central bank digital currency. 

Appreciating the Value of Paper Currency

It is only natural that we should be ready to respond to changes in the environment surrounding settlements and currency. As well, we should appreciate the increasing sophistication of digital technology. That does not mean, however, that we should underestimate the unique value of paper currency. 

There is a strong preference for cash in Japan. Undoubtedly that reflects the better public safety situation than in many foreign countries. There is simply less risk of theft. Additionally, some people are unfamiliar with digital technologies. Meanwhile, others prefer using cash since they think they will be tempted to overspend if they pay with a credit or debit card. 

We now live in a digital society. That is all the more reason to reaffirm the feelings of reliability and security that come with the use of paper currency.

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(Read the editorial in Japanese.)

Author: Editorial Board, The Sankei Shimbun