Should the Bank of Japan Issue a Digital Currency?
Speech at a Reuters Newsmaker Event in Tokyo
Masayoshi Amamiya
Deputy Governor of the Bank of Japan
I. Introduction
It is a great honor and pleasure for me to be able to speak to you today.
In recent years, the environment surrounding Japan's payment and settlement systems has
gone through various changes. On the demand side, consumers seek more convenient
payment services, such as those available during the nighttime and on holidays or low-cost
international remittance services. Diversified lifestyles and the spread of e-commerce
businesses have contributed to this. On the supply side, new devices -- such as smartphones
and IC cards -- enabling the public to access payment services have continued to expand. In
addition to traditional financial institutions, non-bank firms with strong capabilities in
information technologies, or so-called FinTech firms, have started to provide cashless
payments services.
As central banks have a responsibility to improve the safety and efficiency of payment and
settlement systems, their future landscape in the digital age is an extremely important topic
for us. In fact, whether central banks should issue digital currencies as a payment
instrument substituting for cash (banknotes and coins) has become an important issue.
Digital currencies issued by central banks are called "central bank digital currencies"
(CBDCs). The Bank for International Settlements (BIS) conducted an interesting survey on
central bank initiatives for CBDC (Figure 1). Among the 63 respondent central banks, about
70 percent are engaged in CBDC work, most of which is in the form of research/study or
experiments/proof-of-concept. Central banks that have actually been developing CBDCs
and are seriously considering its issuance are in the minority; they are limited only to those
of countries, such as Sweden where the circulation of banknotes is rapidly decreasing and
emerging and developing countries where the infrastructure supporting banknotes has not
yet fully developed. Except for these cases, many central banks see themselves as unlikely
to issue CBDCs in the short or medium term.
Many central banks therefore take the position that they have no plan to issue CBDCs in the
near future but will continue research into CBDCs, which is the position the Bank of Japan
also takes. But why do central banks take this seemingly contradictory position? The main
aim of this speech is to explain the background to this.
First allow me to outline Japan's current status regarding retail payments -- that is,
developments in person-to-person (P2P) money transfers and person-to-merchant (P2M)
payments -- and then talk about the possible forms of CBDC and its expected roles. I will
then discuss the implications of the research on CBDC for the future payment and
settlement systems as a whole, including private digital currency.
II. Cash and Cashless Payments in Japan
Let's start by looking at survey results and statistics to discover current trends in retail
payments and the degree of progress toward a cashless society in Japan.
Payment Instruments for Individuals
According to the results of a recent survey on individuals' payment instruments, the ratio of
cash payments to cashless payments in private consumption expenditure is almost one to
one (Figure 2). This figure displays the survey results of the share of payment instruments.
In the survey, transfers between bank accounts are included as cashless payments. Thus, it
should be noted that the ratio of cashless payments is at a higher level compared with that
excluding transfers between bank accounts, which is often the case in other surveys.
Looking at the share of payment instruments, the share of credit cards is high, at about 30
percent, and that of prepaid electronic money issued by firms such as transport and
distribution firms is about 5 percent. The use of FinTech payment services, or "XYZ pay,"
that use mobile devices such as smartphones is still very limited, accounting for less than 1
percent.
At what pace will the share of cashless payments increase? It is difficult to project the pace
but developments in the amount of cash in circulation are useful as reference information
(Figure 3). The year-on-year rate of change in the amount of cash in circulation for 1 yen
and 5 yen coins for 2018 declined very moderately. Meanwhile, the rate for the 100 yen
coin was in the range of 0.5-1.0 percent, increasing at around the same rate as the nominal
GDP growth rate for 2018. The rates for the 500 yen coin and 1,000 yen banknote were
over 2 percent. Those for 10,000 yen and 5,000 yen banknotes were even higher, being in
the range of 3 to 4 percent.
This increase in the amount of high denomination banknotes in circulation, including
10,000 yen banknotes, reflects the increasing demand for cash as a store of value -- that is,
savings held in the form of cash under the mattress. The lower interest rate environment has
lowered opportunity cost of holding cash. On the contrary, not many people hold 1,000 yen
banknotes or 500 yen coins, or even 100 yen coins, under the mattress. I think the increase
in circulation of these banknotes and coins indicates the possibility of their continued use as
a means of payment rather than as a store of value.
Based on these facts, cashless payments seem to be expanding in small-value payments
where the change piles up, but cash still continues to be widely used as a means of payment.
The year 2018 saw a growing social interest in cashless payments; however, despite the
general impression gained from the media, the pace of transition from cash to cashless
payments seems to have been moderate. The news that there were long queues at bank
ATMs
before the 10-day holiday from late April to early May 2019 indicates that cash is
still an important payment instrument for many consumers.
Moderate Transition to Cashless Payments
Why the moderate transition to cashless payments in Japan? It is considered that the causes
lie in both the demand and supply of cash payments.
The demand for cash payments is thought to be related to people's perception of cash: less
concern about wasting money than when using cashless payment instruments; a safe
environment where cash is rarely stolen and is even often returned when people lose their
pocketbooks or purses; and public confidence in the high security levels of
anti-counterfeit
Japanese banknotes, resulting in counterfeit banknotes having a very low circulation. The
prolonged low interest rate environment may also have pushed up the demand for cash.
As for the supply of cash payments, cash payment networks supported by financial
institutions' bricks and mortar branches and ATMs are important (Figure 4). The denser the
networks, the more convenient cash withdrawal from the bank account and cash deposit to
the account. For this reason, the greater the number of branches of financial institutions per
habitable area, the higher the ratio of cash in circulation to nominal GDP tends to be.
Japan's high ratio of cash in circulation to nominal GDP is considered to be due to the
established convenient and inexpensive cash supply chain, as exemplified in the
concentration of financial institutions' branches and ATMs within a small national territory.
These structural factors in the demand and supply of cash payments are considered to have
slowed down the transition to the cashless payments. Nonetheless, if the number of new
cashless payments users and merchants increases up to a certain scale, the use of cashless
payments could then expand sharply. Let's take a look at the case of South Korea. In the
wake of the Asian currency crisis in the late 1990s, South Korea's government promoted
cashless payments as a part of economic policy package. It introduced a system of a
deduction of 20 percent of annual credit card payments from taxable income, and obliged
merchants to accept credit cards. These measures turned the tide, and the move toward a
cashless society accelerated.
In Japan as well, the government plans to introduce loyalty rewards for using cashless
payment instruments with the scheduled consumption tax hike in October 2019. These
measures may provide a boost toward the cashless society in Japan.
III. Central Bank Digital Currency and Private Digital Currency
The phenomenon of the demand for cash being surprisingly persistent and the ratio of cash
in circulation to nominal GDP continuing to increase has been observed not only in Japan
but in many countries.1 Nonetheless, cashless payments will likely increase in numerous
countries in the long run. Against this background, there has been a growing interest in the
digitization of currencies issued by central banks, or central bank money.
1. Issuance Forms of Central Bank Digital Currency
There are two main variants of CBDC. One variant is electronic central bank money, which
offers access to a limited group of users such as banks, among whom it is used for funds
settlement. This variant, called "wholesale CBDC," adopts new information technologies
such as distributed ledger technology (DLT) in settlements using central bank deposits, or
central bank liabilities which have been digitized. The other variant is electronic central
bank money which is assumed to be widely accessible, including for individuals and firms.
This variant is called "general purpose CBDC." From now on, I will use the term CBDC to
refer to the general purpose variant.
A general purpose CBDC is a substitute for cash (banknotes and coins), and two issuing
forms are possible (Figure 5). One is an "account-based" CBDC, in which individuals and
firms open an account at a central bank and use it to make transfers between accounts. This
scheme is fundamentally the same as transfers between accounts held at private banks. The
difference lies in whether the accounts are held at the central bank or at private banks. The
other form is a "token-based" CBDC, also referred to as a "value-based" CBDC, in which
users deposit CBDC to their smartphone applications or IC cards and transfer value to other
users when making payments. This scheme is similar to prepaid electronic money issued by
transport and distribution firms and FinTech firms. The difference is whether the issuer is a
private firm or the central bank.
2. Expected Roles for Central Bank Digital Currency
CBDCs are expected to play various roles (Figure 6). For instance, in terms of monetary
policy, academia, in principle, argues that CBDCs should bear interest -- even negative
interest rates in some cases -- as that could increase the effectiveness of monetary policy.
This argument is based on the premise that the level of interest rates applied to CBDC could
work as the effective lower bound of interest rates for wide-ranging financial assets.
However, in order to overcome the zero lower bound of nominal interest rates, cash needs
to be completely eliminated. This is because even if a central bank applies negative interest
rates to CBDC, as long as cash which yields zero interest remains, there will be a shift of
funds toward cash. Abolishing cash, used by many people, would only make payment
infrastructures less convenient. There is no central bank that wishes to do this.
Resolving the Crowding of Cashless Payment Instruments
We often hear the opinion that the rationale for issuing CBDC is to resolve the crowding of
cashless payment instruments and to unify all payment instruments. Because of the large
number of cashless payment instruments currently available, consumers are often at a loss
as to which one to use. In this regard, Professor Sheena Iyengar of Columbia University
conducted an interesting experiment on the provision of choice. She carried out a social
experiment where consumers shopping at a grocery store encountered a tasting booth for
jam that offered either 6 or 24 different flavors. The results showed that more consumers
stopped at the tasting booth displaying 24 flavors, but when it came to purchasing behavior,
consumers who were exposed to 6 flavors were more likely to purchase the product. This
implies that extensive options can attract people's interest, yet when they are too extensive
they tend to reduce people's motivation to make a choice. Many might perhaps feel that this
notion is reflected in current developments in cashless payments in Japan.
If central banks issue CBDCs and many consumers begin to use them, there is certainly the
possibility that this would lead to a resolution of the crowding of cashless payment
instruments. In fact, looking back at the history of currency globally, the issuance of
banknotes has become limited to central banks as the issue of banknotes by multiple private
banks in the past led to their uncontrollable increase, causing economic turmoil.
That said, it is not appropriate to identify the current retail payments market with the past
where the uncontrollable increase in the issue of banknotes by multiple institutions caused
turmoil. The retail payments market is now in a phase where FinTech firms and financial
institutions are competing with each other in payments innovation. The Bank of Japan
judges that it is important for now to promote innovation in the private sector, as it has
of cashless payment
strong information technology capabilities. If the current crowding
instruments is maintained forever, it would reduce consumers' economic welfare, but such a
situation will likely be resolved eventually in the process of competition.
Maintaining the Competitive Environment in the Retail Payments Market
On the other hand, leaving the competition up to the market may not lead to desirable
outcomes in the long term; it could possibly result in "market failure." The payment and
settlement systems have "network externalities" where the wider a network is, the more
benefit the participants in the network can enjoy. For this reason, if the number of users and
merchants in the network exceeds a certain scale -- "a critical mass" -- the scale of the
payment platform would expand greatly, leading to an oligopoly or monopoly in the retail
payments market. If specific businesses gain strong control over the retail payments market,
it could distort the pricing mechanism, decrease incentives for innovation, or increase
systemic risk when problems arise.
At present, the Japanese retail payments market is not facing any oligopoly or monopoly.
However, a decline in competition in the retail payments market is now an issue in some
countries like Sweden, where cash circulation is rapidly declining and society is becoming
increasingly cashless. Some argue that the issuance of CBDC would contribute to
maintaining the competitive environment in the retail payments market.2 It is believed that
if a central bank builds cashless payment platforms, this would maintain the pressure on
private sector firms to compete with each other. However, my take is that issuing CBDC is
not the best option to promote competition in the retail payments market. The first possible
prescription should be a government policy on competition, such as splitting up monopoly
firms and strengthening regulations to resolve distortions in competition. Therefore, I
believe it is not really appropriate to issue CBDC for the purpose of promoting competition
in the retail payments market.
Fundamental Functions of Currency and a System
Two-Tiered
To explore the rationale for issuing CBDC, we can simply get back to the fundamental roles
of currency. Payment instruments that are safe, reliable, inexpensive, and available to all are
essential to support economic activities. I think most people would agree that the central
bank should continue to be responsible for supplying these instruments in the digital age as
well. The rationale for issuing CBDC may basically rest on this.
CBDC functions not only as a means of payment but also as a store of value. In normal
times, people may not be aware of the difference between central bank money and private
money (i.e., money issued by the private sector); however, this is not the case in times of
financial crisis or natural disaster. When people are anxious, the precautionary demand for
central bank money free of credit risk tends to increase. When the Great East Japan
Earthquake hit Japan, there was a significant increase in cash withdrawal in disaster areas.3
Also, when the Lehman Brothers bankruptcy led to a financial crisis in Iceland, demand for
cash soared so high that the Central Bank of Iceland's inventory of banknotes was nearly
exhausted.4 These facts show that it is reasonable to say that a framework should be in
place to supply highly credible central bank money that is suitable for the digital age.
Nevertheless, issuing CBDC in normal times with the purpose of preparing for crisis could
pose a new challenge. For example, if CBDC starts to substitute for bank deposits, it could
squeeze banks' credit intermediation and affect the real economy. There is also the view that
CBDC, which functions as a safe haven in times of stress, would rather amplify the stress.
Since all it takes is a few clicks on a computer or smartphone, a shift from bank deposits to
CBDC would occur in a much more drastic way in the digital age than with traditional bank
runs, and thus could exacerbate a financial crisis. This is called a "digital bank run."
As we look deeper into these issues, we end up facing the issue of how we should treat the
system,"
"two-tiered established in most modern states. Under the two-tiered system, a
central bank exclusively supplies the public with central bank money consisting of cash and
central bank deposits, and private banks provide deposits through credit creation based on
system
the central bank money. The two-tiered has various advantages regarding
information processing and resource allocation. While the credibility of currency is ensured
by central bank money, financial resources are efficiently allocated through private-led
initiatives. Private sector innovations are greatly utilized in the area of payment services.
For example, new cashless payment instruments offered by FinTech firms provide better
user interface using smartphones and make payment using deposits very handy.
No matter how safe and reliable CBDC is as a payment instrument, the benefits derived
system
from the two-tiered would be lost if private money were to be replaced by CBDC on
a considerable scale. When considering the design of payment and settlement systems, it is
necessary to examine ways to improve the overall functions and credibility of the systems.
In doing so, central bank money and private money should not be considered independently.
We need to take into account the interrelations between the two. Next, I will discuss how
the functions of private digital currencies can be improved to achieve a level close to the
expected functions of CBDC in terms of creditworthiness, general acceptability, and
settlement finality (Figure 7).
3. Improving the Functions of Private Digital Currency
Creditworthiness of Private Digital Currency
As I have mentioned earlier, in the digital age, it is important to prepare ourselves for crises
with safe assets, and CBDC is an important possibility. However, it is also important to
design a framework that improves the creditworthiness of private money, regardless of the
issuance of CBDC. If the credit risk of private money could be minimized and the credit
gap between private money and central bank money could be narrowed, the issue of a shift
from bank deposits to CBDC could, in theory, be alleviated.
In Japan, among the various types of private money, a framework of protection provided by
deposit insurance for bank deposits was put firmly in place after the crisis of the late 1990s.
As for electronic money issued by transport and distribution firms and FinTech firms,
consumer protection is provided by securing assets. For example, firms issuing electronic
money which is convertible to cash are required by law to secure funds equivalent to or
more than the amount received from users, by making a security deposit or by other means.
As for developments overseas, in China, BigTech firms, including Alipay and WeChat Pay,
that provide payment services are required to deposit funds equivalent to the amount
received from their users in accounts at the People's Bank of China. This could be seen as
an example of a scheme where BigTech firms issue private digital currencies based on the
credibility of a central bank. In terms of functionality, it is very much the same as narrow
banking, where the central bank requires full reserves, and is almost equivalent to CBDC in
terms of creditworthiness.
To ensure the stability of the retail payment system as a whole, it is essential to design a
framework that secures the creditworthiness of private digital currencies. The social impact
would increase as the scale of the cashless payment platforms operated by the private sector
grows. With regard to payment instruments and services, the authorities would therefore
need to put an adequate regulatory framework in place. As for firms operating
risk-based
payment platforms, they would be required to take responsible action, including adoption of
sophisticated risk management procedures and stringent responses to regulatory
requirements.
General Acceptability of Money
Even if the of private digital currencies improves, it does not mean that
creditworthiness
they will be widely accepted as money. For instance, merchants participating in different
payment platforms operated by FinTech firms do not necessarily overlap. This means that
electronic money issued by a FinTech firm cannot be used in transactions with merchants
participating in payment platforms operated by different FinTech firms. Moreover, users
cannot conduct P2P money transfers across different payment platforms. Thus, electronic
money issued by FinTech firms is at present considerably inferior to cash in terms of
general acceptability.
Overseas, there are cases where interoperability among payment service providers is
ensured. For example, in Hong Kong, major banks and nonbank payment service providers
(store value facilities) such as Alipay and WeChat Pay have joined the Faster Payment
System -- a real-time funds transfer system which operates on a 24/7 basis -- launched by
the Hong Kong Monetary Authority in 2018. This has enabled users of these service
money
providers to conduct P2P transfers. Users can even transfer funds to bank accounts
using electronic money issued by these nonbank payment service providers. To the extent
that interoperability is ensured, the general acceptability of electronic money issued by the
private sector will likely increase.
With regard to interoperability among private digital currencies, whether a central bank
should allow new nonbank payment service providers, such as FinTech firms, to open
current accounts at the central bank may be an issue for discussion. If the interoperability of
private money is enhanced through safe and efficient settlement using central bank current
accounts, private digital currencies could resemble CBDC in terms of general acceptability.
However, central banks need to examine the notion of allowing nonbanks to access current
accounts comprehensively from various aspects, including the potential impact on financial
systems in addition to interoperability. Needless to say, nonbanks seeking access to
payment and settlement systems via central bank current accounts would be required to
meet strict standards in many areas, such as financial soundness, information security, and
risk management. Overseas, nonbank payment service providers are now allowed to open
current accounts at central banks in countries such as the United Kingdom and Australia.
This is also currently under consideration in Switzerland and Singapore.
Settlement Finality
Now, I would like to touch upon the issue of "settlement finality." Finality means that
settlement of an obligation is irrevocable. Central bank money is not only credit risk free,
but also provides immediate finality. Banknotes can be used to settle obligations 24 hours a
day, 365 days a year with finality.
In Japan, the launch of the Zengin More Time System in October 2018 has enabled users to
send funds on a basis 24 hours a day, 365 days a year for transfers of less than 100
real-time
million yen per transaction (hereinafter referred to as "retail transfers").
It should be noted,
retail
however, that transactions between financial institutions, accompanying these
transfers between users, are settled on a deferred net settlement (DNS) basis. Under a DNS
system, payment instructions received from financial institutions are pooled until a
designated time, and then the gross values of incoming and outgoing funds are netted out.
Only the net amount is settled. While the efficient use of liquidity provided by DNS is an
advantage, it accumulates unsettled positions up to the designated time, which means that
settlement is not final until this net position is settled. In this way, DNS harbors a systemic
risk; if even one of the participating financial institutions fails to meet its obligations, it
could potentially start a chain reaction affecting all other institutions.
If the number of retail transfers via deposit accounts at financial institutions increases with
the progress toward a cashless society, it could bring an increase in intraday unsettled
positions, thereby accumulating risks in payment systems as a whole. To
and settlement
address this concern, one option is to reduce dependence on settlement via deposit accounts
at financial institutions by issuing a CBDC which provides immediate settlement finality.
However, there are also other options; settlement methods of retail between
transfers
financial institutions could be changed from DNS to gross settlements (RTGS).
real-time
RTGS offers a simple way of settling funds where the central bank immediately executes
payment instructions received from financial institutions. Under an RTGS system, as each
payment is settled with finality in real time one after another, systemic risk can, to a large
extent, be contained. To settle RTGS transactions 24 hours a day, 365 days a year, the
central bank's system also needs to operate
throughout the day.
enable retail transfers 24 hours a day, 365 days a
Meanwhile, new RTGS platforms, which
year,
have already been launched in places such as Australia, Hong Kong, and Europe. In
these platforms, settlement finality is ensured, as with CBDC. I think that it is important for
retail
each jurisdiction to consider the most desirable way to settle transfers through
cost-benefit analysis, while taking into account developments in payments and settlements
in each country.
IV. Concluding Remarks
Today, I have had the pleasure of sharing with you my understanding on retail payments in
the digital age, focusing on the relationship between central bank money and private money.
Now, I would like to give you my own answer to the question I posed at the beginning:
"Why are many central banks, including the Bank of Japan, committed to researching and
studying into CBDCs even though they have no plan to issue them in the near future?" I
have two reasons. First, since technological innovation evolves rapidly, the retail payments
market structure could suddenly change dramatically, pushing us toward a cashless society.
In some cases, the need for CBDC issuance may suddenly increase. To be able to adapt to
such a situation, central banks need to deepen their understanding on the latest
developments in information technologies and their applicability to CBDC. Second, as I
have discussed in the latter half of my speech, through research into CBDC -- or through the
CBDC lens -- central banks examine more fundamental questions such as: "What are the
required functions of money?"; "What ways do we have of improving the complementary
relationship between central bank money and private money?"; or "What ways do we have
of enhancing the functionality of private digital currency?" This process can offer clues for
ways in which payment and settlement systems as a whole can be improved.
The Bank will continue to examine CBDC with these two aspects in mind. In this respect,
allow me to introduce two of our recent initiatives. On the technological front, the Bank is
continuing research into distributed ledger technology -- DLT. Project Stella, a joint
research project with the European Central Bank is part of these initiatives.5 This project
has resulted in three reports so far, exploring, for example, the applicability of DLT to
payments using central bank deposits -- that is, wholesale CBDC.
On the legal front, the Bank's Institute for Monetary and Economic Studies set up a study
group on legal issues regarding CBDC in November 2018. It identifies potential legal issues
that would arise if the Bank were to issue CBDC in response to rapid developments in
technology and their possible interpretations. The report will be released in due course.
The Bank will continue to work to improve the efficiency and safety of payment and
settlement systems. It will examine, from various perspectives, the desirable nature of these
systems, including the issue of CBDC. And this brings me to the end of my speech.
Thank you very much for your attention.
Should the Bank of Japan Issue
a Digital Currency?
July 5, 2019
Speech at a Reuters Newsmaker Event in Tokyo
Masayoshi Amamiya
Deputy Governor of the Bank of Japan
Figure 1
Survey on CBDC
Initiatives for CBDC Likelihood of issuing a CBDC
going forward3
Engagement in CBDC work1 Type of CBDC work2
%
%
%
100
100 100
80
80
80
Very
unlikely
Somewhat
60
60
60
unlikely
Possible
No
40
40
40
Somewhat
Yes
likely
Very likely
20
20
20
0
0
0
CY
2017 2018
Research/study Experiments/ Development/
Short term Medium
proof-of-concept pilot
term
arrangement
Notes: 1. Share among the 63 respondent central banks. The sum of general purpose CBDCs and wholesale CBDCs.
2. Share among the respondent central banks that answered that they were engaged in CBDC work in 2018 survey (multiple answers were allowed).
The sum of general purpose CBDCs and wholesale CBDCs.
3. Share among the 63 respondent central banks. Figures are for general purpose CBDCs. "Short term" denotes 1-3 years and "Medium term" denotes
4-6 years.
Source: Christian Barontini and Henry Holden, "Proceeding with Caution -- A Survey on Central Bank Digital Currency," BIS Papers, No.101, January 2019. 1
Figure 2
Share of Payment Instruments in Private Consumption Expenditure
Cash (48.2%)
Credit cards (31.4%)
Direct debit (10.5%)*
Prepaid electronic money (5.0%)
Internet banking (1.4%)*
Bank transfer (using bank cards) (0.9%)*
Share of
cashless
Debit cards (0.8%)
payments
(51.8%)
FinTech services (0.7%)
Deduction from salaries (0.2%)*
Crypto-assets (0.1%)
Other non-cash payment instruments (0.8%)
Share of transfers between bank accounts (sum of instruments with asterisks[*]): 13%
Note: In the figure "prepaid electronic money" refers to services such as Suica, PASMO, Rakuten Edy, nanaco, and WAON. "FinTech services" refers to payment
services -- other than prepaid electronic money -- that is provided by FinTech firms; the services include iD, QUICPay, Alipay, WeChat Pay, Apple Pay,
Google Pay, Rakuten Pay, LINE Pay, and Origami Pay. The survey was conducted online with a nationwide sample of 3,000 individuals who are between the
ages of 20 and 69.
Source: The Nippon Institute for Research Advancement (NIRA), Survey on Cashless Payments in Japan, September 2018 (available only in Japanese).
Figure 3
Amount of Cash in Circulation
Amount of banknotes
Amount of coins Change in the amount of
in circulation
in circulation banknotes/coins in circulation for 2018
Annual average, 100 million Annual average, 100 million
Year-on-year change, %
450
100
5
10,000 yen
90 400
5,000 yen
4
500 yen
80
350
2,000 yen
100 yen
3
1,000 yen 50 yen
70
300
10 yen
Nominal GDP
60
5 yen
2
250
growth rate for
1 yen
2018
50
200
1
40
150
30
0
100
20
-1
50
10
yen yen yen yen yen yen yen yen yen yen
5 1
50 10
500 100
0
0
5,000 2,000 1,000
10,000
CY 85 90 95 00 05 10 15
85 90 95 00 05 10 15
CY
International Comparison of the Number of Financial Institutions' Branches
Figure 4
and Cash in Circulation
International comparison of the number of financial Correlation between the ratio of cash in circulation to
institutions' branches per habitable area GDP and the number of branches per habitable area
Number of branches per 10,000 km2
Ratio of cash in circulation to GDP, %
100,000
25
10,000
Japan
20
Hong Kong
1,000
15
Switzerland
100
Russia
10