The E-Sylum:  Volume 7, Number 45, November 7, 2004, Article 17

JAPAN'S NEW CURRENCY

  On Friday, October 29 Reuters published an article about
  new currency being released in Japan.

  "Holograms and kaleidoscopes of shimmering colors will
  be part of Japan's latest hi-tech response to the growing
  number of banknote counterfeiting cases troubling authorities.

  New banknotes will go into circulation on Monday with
  sophisticated security features and new designs as the
  central bank hopes to reverse a 25-fold rise in the number
  of forged notes discovered in the country in the past five
  years.

  "We have made these banknotes hoping they will be
  foolproof," Bank of Japan Governor Toshihiko Fukui said
  in August. Some 30,000 forged banknotes are expected
  to be found by the end of this year alone, almost double
  the 16,910 in 2003.

  The new notes -- the first major overhaul in 20 years --
  will feature holograms, watermarks and latent images,
  where the word "Nippon" (Japan) can be seen on the
  reverse when the notes are slanted at a specific angle.

  Iridescent pink ink will be used on the borders of the
  bills, and the Chinese characters for "1,000 yen" will
  appear in pink when the bill of that value is tilted a
  certain way."

  "While the Bank of Japan may have hoped the notes were
  foolproof as well as in tune with the times, however, officials
  were left red-faced earlier this month when a stolen test print
  of the new 1,000 yen bill came up for auction on an Internet
  site.

  The bill attracted a nominal bid of around $89 million before
  the auction was canceled."

  To read the full story, see: Full Story

  On November 2, The New York Times published an article
  on the topic.

  "For the first time in 20 years, Japan has redesigned its bank
  notes, issuing a pretty new series of bills on Monday that feature
  rabbit-ear irises, the first formal portrait of a woman on a
  Japanese bank note, and, of course, the requisite image of a
  snow-capped Mount Fuji, framed in cherry blossoms.

  Unlike the currency changes once common in South America's
  inflationary economies, no zeros were lopped off the notes of
  deflationary Japan.  With one United States dollar now worth
  106 yen, the new 1,000-yen note is worth $9.45, the new
  5,000-yen bill is worth $47.27, and the new 10,000-yen note
  is worth $94.50."

  The high cost suggests another agenda, which appears to be
  flushing out hidden money. The currency shift is an attempt to
  bring into the economy trillions of yen that Japan's elderly
  keep stashed at home.

  "The trick in Japan is to unlock the mattress money, the futon
  money," Jesper Koll, chief economist for Merrill Lynch Japan,
  said. "In Japan, coins and notes account for about 15 percent
  of national income, which compares to 6 percent in Germany
  and 3 to 3.5 percent in America."

  Until Japan's banking crisis hit a decade ago, 7 percent of the
  national income was held in cash. Now, with the banks
  increasingly stable, the government hopes to lure some of the
  $700 billion in mattress money into banks, or better yet into
  consumer spending and investments."

  "Although the old notes are to be withdrawn from circulation
  two years from now, there is no fixed date for their sunset as
  legal tender.

  Even so, Japanese authorities evidently hope that the prime
  minister's visit to the Bank of Japan will send a signal to
  people hoarding cash that they should turn in their money.
  About two-thirds of cash in Japan is held by people over 65
  years old. The act of bringing cash to a bank may prompt
  some to spend it."

  To read the full story, see: Full Story

  Wayne Homren, Editor

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