Editorial: Rise of digital currencies requires global cooperation for sound development
The issuance of stablecoins, digital currencies pegged to government-issued currencies such as the yen and the dollar, is expanding, particularly in t
As digital currencies, like stablecoins, grow in prominence, it becomes clear that international collaboration is crucial for their proper development. These digital currencies, which are pegged to traditional currencies such as the yen or dollar, provide benefits such as low-cost, 24/7 transactions. However, for them to become a next-generation currency, they require global infrastructure and regulations.
Stablecoins, issued by private companies, are a type of cryptocurrency unlike Bitcoin, whose values are less volatile. Their value is maintained by the issuers holding government bonds and other reserve assets equal to the coin's value. The U.S. administration under President Donald Trump is promoting dollar-denominated stablecoins as a national initiative, aiming to keep the dollar dominant in the digital age and stimulate demand for U.S. government bonds.
Major tech companies and banks in the U.S. are vying to expand the use of stablecoins. As of September, the total value of stablecoins in circulation worldwide reached approximately $300 billion, with the majority being dollar-denominated coins. In Japan, a startup issued the country's first yen-denominated stablecoin last fall, and the nation's three megabanks are considering a joint stablecoin issuance to keep pace with U.S. banks.
The administration of Prime Minister Sanae Takaichi is supporting these efforts by including the promotion of digital currencies in its economic and fiscal management policy.
Despite their advantages, stablecoins face challenges such as potential cyberattacks and misuse for illegal activities. Thus, stronger cross-border monitoring is required. There is also concern that if dollar-denominated stablecoins become widely used globally, they could undermine the monetary sovereignty of countries like Japan and European nations, limiting their fiscal and monetary policies.
To address these issues, cooperation and competition must coexist. In Japan, a cross-industry organization called the Digital Currency Innovation Organization was launched this summer to promote the responsible adoption of digital currencies. Public and private sectors must combine their expertise to decide on the optimal form of digital currencies and share their vision with the world.
Written by urgent.news from The Mainichi's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
