Japan, traditionally known for its strong preference for cash transactions, has seen cashless payments rise from 13.2% in 2010 to 42.8% last year, according to government data cited by Reuters on June 11.
This shift has prompted the Japanese government and the Bank of Japan (BOJ) to explore the introduction of a central bank digital currency (CBDC). Although no decision has been finalized, the BOJ launched a CBDC pilot program in 2023, positioning Japan among major economies testing digital currency technologies.
The BOJ is collaborating with private companies and government agencies to develop the framework and design of the digital yen. BOJ Executive Director Kazushige Kamiyama highlighted the potential decline in banknote use amid rapid digitalization, emphasizing the need for a convenient, efficient, secure, and accessible retail payment system.
Deputy Governor Shinichi Uchida described the CBDC as potentially becoming essential infrastructure for Japan’s future payment systems but noted that cash demand is unlikely to fade soon.
Globally, cash usage is decreasing. In Latin America, in-store cash payments dropped from 67% in 2014 to 25% last year and are projected to fall to 17% by 2030, according to PYMNTS Intelligence. In the United States, the Treasury Department plans to phase out the penny, which costs nearly four times its face value to produce, resulting in annual losses exceeding $56 million for the U.S. Mint.