The abolition of 10,000 yen banknotes is approaching?

The circulation of 10,000 yen banknotes in Japan has reached 108 trillion yen, accounting for 20% of the gross domestic product (GDP), and it is a “big denomination banknote country”.

Japan’s new 10,000 yen banknote will be unveiled in 2024. The figure on the currency is Shibusawa Eiichi, known as the “father of the Japanese business industry.” Shibusawa participated in the creation of Japan’s first bank “First National Bank” (now Mizuho Bank ), Japan’s first insurance company “Tokyo Marine Insurance” (now Tokyo Marine & Nippondo Fire Insurance), etc., setting many ” firsts” in Japan . However, the 2024 new banknote may become Japan’s last 10,000 yen banknote.

The abolition of 10,000 yen banknotes is approaching?

The character on the new Japanese 10,000 yen bill is Shibusawa Eiichi

This is the first portrait design change in the 10,000 yen banknote in about 40 years. Coupled with the former protagonist of the Japanese NHK TV station Dahe drama (historical drama), Japan may even set off a “Shibusawa fever”. In addition to the fact that the 1,000 yen banknote will also be revised, the situation of 770 billion yen in special needs such as the upgrade of ATM (bank automatic teller machine) is also expected.

However, a major trend in the world is the abolition of large-denomination banknotes. The Singapore government stopped issuing large denominations of 1,000 Singapore dollars (approximately RMB 4,804) banknotes in January 2021. In 2019, when Japan decided to issue a new version of banknotes, Europe is abolishing 500 euros (about RMB 3,826) banknotes. Even in the United States, which issued the axis currency, the US dollar, former Treasury Secretary Summers and others are advocating the abolition of the 100 US dollar (about 647 yuan) banknote.

The reason is to prevent fund crimes. Anonymity of cash is easy to be used for money laundering, tax evasion, etc., especially large-denomination paper currency, it is the protagonist of these crimes. For example, in Mexico in 2007, after a drug cartel was seized, a large number of US dollar banknotes of up to 200 million US dollars were found in a residence. The British government also pointed out in the report that “90% of the 500 euro banknotes in the country are in the hands of criminal organizations.”

In fact, the circulation of large-denomination banknotes has “exceeded the limit.” In the United States, less than 100 US dollars of banknotes have been used in daily life, but the circulation is still 16.4 billion, and the average holding of each family is 120. It is believed that a large amount of US$100 banknotes are flowing out of the United States, and Harvard University professor Kenneth Rogoff, who advocates the abolition of large-denomination banknotes, speculates that “most of them are used in secret criminal activities.”

The circulation of 10,000 yen banknotes in Japan has reached 108 trillion yen, accounting for 20% of the gross domestic product (GDP), and it is a “big denomination banknote country”. Calculated by this figure, the average Japanese citizen holds about 90 copies, and even the cash saved by the household has a considerable amount of cash in circulation. Officials from the Japanese Ministry of Finance also pointed out that “it may be used for tax evasion, etc.”. The International Organization’s Anti-Money Laundering Financial Action Task Force (FATF) will assess Japan’s implementation of “unqualified” as early as August. As a fundamental countermeasure, the task force is asking countries to abolish large-denomination banknotes.

The digital currency (CBDC) concept proposed by central banks will accelerate this trend of abolishing large-denomination banknotes. The European Central Bank (ECB) will introduce a “digital euro” in 5 years at the earliest. The Federal Reserve Board (FRB), which has always been cautious, will also officially start discussing the issue of digital currency this summer, and the Bank of Japan (the central bank) is expected to follow Europe and the United States to take action. Major countries in the world are considering the coexistence of cash and digital currencies, but Sweden, which is at the forefront of cashlessness, has reduced the circulation of cash to the level of 1% of GDP. Nowadays, it is almost impossible to see the highest denomination 1000 kronor banknote.

Private banks in Japan are also eager to digitize currency. According to estimates by Japan’s Nomura Research Institute, plus ATM operating expenses and labor costs at bank counters, the social cost of cash reaches 1.6 trillion yen per year. The total actual operating net profit of the three major Japanese banks for fiscal year 2020 (as of March 2021) is only 1.7 trillion yen, which shows that cashlessness has the potential to significantly change the cost structure of banks.

The earliest paper currency of mankind is considered to be the “Jiaozi” used in the Northern Song Dynasty in the 10th century. Marco Polo once praised China’s paper currency as “the highest alchemy”. Paper money eliminates the heavy physical constraints of copper coins and undoubtedly laid the foundation for modern economic development.

Shibusawa Eiichi once warned people to “make good money and spend money well”, thinking that the full flow of currency will promote economic development. However, the convenience of banknotes can sometimes cause inflation, lead to economic chaos, and even become a means of capital crime, disrupting society. A new generation of digital currency may also need to take on the important task of eliminating the “negative factors” of the currency economy.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/the-abolition-of-10000-yen-banknotes-is-approaching/
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