Japan new banknotes seen creating 1.6-T.-Yen demand

April 10, 2019

Tokyo--Japan's banknote redesigning is expected to generate special demand worth 1.6 trillion yen, including for new automated teller machines and vending machines.

Meanwhile, costs for ATM updating and replacement will weigh on financial institutions struggling with decreased earnings amid prolonged superlow interest rates in the country.

The government is expected to start circulating the redesigned 1,000-yen, 5,000-yen and 10,000-yen bills by mid-2024. Also planned is the release of a redesigned 500-yen coin by mid-2021.

Demand for inks and materials for the new notes and coin should reach 611.4 billion yen, according to estimates by Toshihiro Nagahama, chief economist at the Dai-ichi Life Research Institute.

Special demand tied to machine updating and replacement is seen reaching 372.4 billion yen at ATM makers and 606.4 billion yen at vending machine makers.

The redesigning is estimated to push up Japan's nominal gross domestic product by a total of only 0.2 pct over the coming two years and is thus "unlikely to give a sizable impact on the economy," according to Nagahama.

Expectations for the special demand are growing at machine makers. But concerns also linger that demand may not be as large as at the time of the last banknote redesigning in 2004, because Japan is promoting cashless payments, industry people say.

To financial institutions, making their ATMs and money- changing machines compatible with new banknotes will "generate costs," a major bank official said.

They will carefully watch whether they will have only to update software or need to fully replace ATM and other machines.

Facing competition with other industries in settlement services, banks find it hard to imagine their futures five years from now.

Common tasks in the industry include how to reduce retail outlets and review ATM networks. MUFG Bank and Sumitomo Mitsui Banking Corp. are in talks to share ATMs outside their branches.

The banknote and coin redesigning is likely to accelerate such moves. Jiji Press