Japan embraces global cashless policy as Asia leads 21st century digital payment revolution

Japan is making aggressive strides toward a global cashless policy, aiming to shed its reputation as a cash-dependent society and align with Asia’s rapid digital payment transformation. With countries like China and India already dominating cashless transactions, Japan’s push reflects a critical shift in its cashless policy plan to stay economically competitive.

Bank of Japan signals urgency for a cashless policy plan

Kazushige Kamiyama, Executive Director of the Bank of Japan (BOJ), emphasized the need for innovation in payment systems as the nation transitions toward a global cashless policy. While Japan has not yet committed to a central bank digital currency (CBDC), Kamiyama stressed that the country must develop secure, efficient, and inclusive digital payment solutions.

“Banknotes remain widely used, but the decline in cash transactions is inevitable,” Kamiyama stated in a recent Reuters interview. “Japan must ensure its retail payment systems are convenient, resilient, and accessible to all under our cashless policy plan.”

The BOJ has already conducted preliminary tests on a digital yen, collaborating with private firms to explore feasibility. However, the final decision on CBDC issuance rests with the government and parliament.

Asia’s dominance in the global cashless policy movement

While the U.S. lags in CBDC development, Asia is charging ahead. India’s digital rupee pilot has already disbursed agricultural loans directly to farmers, while its circulation surged from $27 million in 2024 to over $118 million this year. The Reserve Bank of India (RBI) is now exploring cross-border CBDC partnerships through the Bank for International Settlements (BIS).

South Korea is also advancing its cashless policy plan with two major CBDC initiatives:

• Project Hangang (domestic tokenized deposits)

• Project Agorá (cross-border payments)

Bank of Korea Governor Rhee Chang-yong personally urged major banks to support wholesale CBDCs, signaling a potential clash between public and private digital currencies.

The rise of cashless systems under Asia’s global cashless policy

China remains the undisputed leader, with Alipay and WeChat Pay serving over 1 billion users. Cash transactions are projected to drop to just 3% by 2027. Meanwhile, Southeast Asian nations like Thailand and Singapore have launched interoperable systems (PromptPay, PayNow) to reduce reliance on Western payment networks.

Japan’s late adoption of a cashless policy plan highlights its unique challenges, including an aging population resistant to digital payments. However, with smartphone penetration rising and government incentives growing, the shift appears inevitable.

The future of Japan’s global cashless policy

As Japan accelerates its cashless policy plan, experts warn that delays could leave its economy behind. The BOJ’s experiments with a digital yen and partnerships with fintech firms suggest a cautious but determined approach.

“The global cashless policy wave is unstoppable,” said fintech analyst Akriti Seth. “Japan must innovate quickly or risk isolation in an increasingly digital financial world.”

With Asia setting the pace, Japan’s journey toward a cashless policy plan will be a defining test of its ability to adapt—and compete—in the new era of money.