Issuance of New Banknotes: Opportunity to Reaffirm Value of Cash in Digital Age

New banknotes will be issued on July 3 for the first time in 20 years. With the advent of a full-fledged cashless era, it is hoped that this will be an opportunity to reaffirm the value of cash.

The portrait on the ¥10,000 bill, which has large circulation, will change from Yukichi Fukuzawa to Eiichi Shibusawa, who is referred to as the “father of Japanese capitalism.” On the ¥5,000 bill, Ichiyo Higuchi will be replaced by Umeko Tsuda, a pioneer of women’s higher education in Japan. The ¥1,000 bill will feature bacteriologist Shibasaburo Kitasato, replacing Hideyo Noguchi.

These portraits are well-known to the public and the new bills will be used with familiarity.

Japan has introduced advanced anti-counterfeiting measures and has been renewing the banknotes around every 20 years. This time, for the first time in the world, a type of 3D hologram technology was adopted, which makes the portrait appear to rotate when viewed from different angles. High-definition watermarks were also added using the skills of craftsmen.

In 2004, more than 20,000 counterfeit banknotes were found, but in recent years the number has dropped to less than 1,000 per year. It is expected that advanced anti-counterfeiting measures will increase a feeling of security when using cash.

The environment surrounding banknotes has changed dramatically over the past 20 years.

In recent years, the government has been promoting the use of cashless transactions from the perspective of addressing labor shortages and reducing the financial burden of having cash. Smartphone payment apps have become more common, and the ratio of people using cashless payments has risen to about 40%.

However, trust in banknotes remains high, as they can be easily used, even by the elderly who are not as familiar with smartphones. Cash can also be used in the event of a major power failure or other disasters.

The government and the Bank of Japan are cautiously considering introducing a digital currency. However, even if they were to issue a digital currency in the future, they intend to make it compatible with cash.

It is important for all people, including the economically vulnerable, to be able to make payments with peace of mind. From the perspective of financial inclusion, being able to make payments using both a digital currency and cash is desirable.

Before the issuance of new banknotes, false information claiming that “old banknotes will no longer be accepted” has already spread on social media, and there are concerns about new types of scams.

It is expected that more people will try to exchange their “mattress money” for the new bills. It is hoped that the police and other authorities will raise the level of caution against crimes that attempt to defraud people of their money through bank transfers under the false pretense that they will exchange their money for new banknotes.

Changes must also be urgently made in response to the new banknotes. Major banks have already finished updating their automated teller machines.

However, it is estimated that only 20%-30% of beverage vending machines and about 50% of ticket vending machines at restaurants and other establishments will be ready before the new banknotes will be issued. It is hoped that the government and businesses will make efforts to keep the public informed about the status of the changes so as not to cause confusion.

(From The Yomiuri Shimbun, June 28, 2024)