MoF on the Internationalization of the Yen

Better utilization of Asian currencies for trade and investment activities in Asia is important. In case of the Japanese yen, efforts to increase the international use of the yen were started in the 1980s. As there are already no constraints caused by regulations and taxation on yen investment and financing, the yen is used today for around 40% of Japanese exports and around 25% of Japanese imports. 

Going forward, we should promote further use of Asian currencies including the Japanese yen, the Chinese renminbi, and the Korean won. 【Japan-China financial cooperation】
 
Regarding Japan-China financial cooperation, in December 2011, Prime Minister Noda and Premier Wen agreed to promote the use of the yen and the renminbi in cross-border transactions between the two countries and to support the development of direct transactions between the yen and the renminbi, not going through the dollar.

Based on this agreement, in June 2012, direct exchange was begun in the foreign exchange markets of both countries, and 10 billion yen and 60 billion yen worth of transactions per day are being conducted daily in Tokyo and Shanghai, respectively. Moreover, as the spread, or difference between the bid and offer rate of these transactions, stably stays close to, or slightly narrower compared to, the spread of transactions through the US dollar, it is expected that the expansion of the direct exchange markets will lead to further reduction in transaction costs and settlement risk.

With regard to the expansion of the international use of the renminbi ("internationalization of the renminbi"), the Chinese authorities are gradually implementing the liberalization of the capital account following the liberalization of the current account. In order to further promote the internationalization of the renminbi, however, greater exchange rate flexibility, and liberalization of interest rates and financial products in domestic financial markets will be also needed. I believe that it is to the benefit of both Japan and China to cooperate together to facilitate this process.

While Japan-China relations currently have some difficulties, China and Japan are the second and the third largest economies with a strong trade and investment relationship. It is extremely important for Japan and China to further deepen economic ties also because the two countries share responsibilities for both Asian and global economic stability and prosperity. Japan would like to make utmost efforts to have close communication with China from a broad and long-term perspective. The Japanese Ministry of Finance on its part would like to continue to promote Japan-China financial cooperation.


Source:

http://www.mof.go.jp/english/international_policy/others/20130114.htm

• MOF has been attempting for some years to promote the internationalization of the Yen

• Attempt has not been successful. To understand why, necessary to consider the double standard of the Japanese government             

• Government’s strategy for the internationalization of the yen is led by MOF, yet that very same government intervenes in exchange rates to protect Japan's export industry by avoiding a rise in the value of the yen, which policy is diametrically opposed to that of internationalizing the Yen