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New 2,000-Yen Bill Could Bolster Economy Activity

December 15, 1999

The 2,000-yen note helps commemorate the G8 Summit in Okinawa. (Financial Bureau, Ministry of Finance)

A 2,000-yen (19 U.S. dollars at 105 yen to the dollar) bill will make its debut in time for the Group of Eight leaders' meeting in Okinawa in July 2000. A directive for the new note, which will serve as the centerpiece of the country's millennium projects, was issued at the first meeting of Prime Minister Keizo Obuchi's reshuffled coalition cabinet following its launch on October 5, 1999.

As the first new currency denomination to be introduced since December 1958, when the 10,000-yen (95-dollar) note went into circulation, the 2,000-yen bill has generated a great deal of excitement. The two localities featured in the design have hailed the decision particularly highly, and there are growing hopes that it will stimulate demand among vending machine manufacturers and boost economic activity.

Good Timing
Commenting on the decision, Prime Minister Obuchi stressed the 2,000-yen bill's suitableness in commemorating the year 2000 and the hosting of the G8 Summit, an event of great importance to Japan. He also emphasized the widespread circulation of currency bearing the digit two in other countries and their convenience for the public.

The front of the bill will carry an illustration of Shureimon, a gate at Shuri Castle in the city of Naha, Okinawa, to commemorate the hosting of the G8 Summit in the prefecture. The back will feature a scene from the Tale of Genji--a literary masterpiece set in Kyoto and dating back nearly a thousand years--and an image of its author, Murasaki Shikibu. The bill will roll off the press beginning next spring, with 100 million bills scheduled for the first printing.

Since World War II, Japan's coins and paper money have all been in denominations bearing the digits one and five. Only three types of paper money are in circulation; the 1,000-yen (9.5-dollar), 5,000-yen (47-dollar), and 10,000-yen notes. Of the total number issued, 10,000-yen bills account for 60.2%, 1,000-yen bills for 35.2%, and 5,000-yen bills for 4.6% (as of August 1999).

By contrast, notes with the digit two make up a substantial share of other countries' currencies. The U.S. 20-dollar bill accounts for 24.3% of all notes issued in the country, the British 20-pound note for 25.6%, and the French 200-franc note for 27.9% (as of the end of 1993). The Bank of Japan believes that the 2,000-yen note will catch on and cause a major shift in the proportion of 10,000-yen and 1,000-yen notes issued.

A Golden Opportunity
Prime Minister Obuchi had been inconspicuously soliciting support for the new note as a highlight of the government's millennium projects. His idea was reportedly inspired by the U.S. two-dollar bill, which was issued in 1976 to commemorate that country's bicentennial. Obuchi's reported goal was to come up with a plan that would have the historical impact of the Apollo space project, hold out hope for economic rejuvenation, and readily gain public approval.

The announcement of the 2,000-yen note took the world of finance by surprise. Most had assumed that a 100,000-yen note would be next in line because 10,000-yen bills already account for more than 90% (91.2% as of August 1999) of currencies in circulation in terms of value. The choice of the 2,000-yen bill made sense with the approach of the new millennium and also made news for its unexpectedness.

Okinawa and Kyoto are delighted that they are being featured on the new bill and have high hopes it will become the springboard for a resurgence of local activity. And a number of industries are already pinning their hopes on a growth in demand. Machinery manufacturers stand to benefit as vending machines, cash dispensers, and train ticket vendors will have to be modified or rebuilt to handle the notes. And paper pulp makers can expect an increase in demand connected with the actual printing of the bills.

Shops and restaurants will likely capitalize on the bill's introduction by advertising 2,000-yen sales or 2,000-yen lunches. However, some people are concerned that the new bill could give shops an excuse to jack up prices that are now slightly under 2,000 yen. Others believe that consumption will rise as an indirect benefit, as numerous events are held to commemorate the start of the millennium, the Kyushu-Okinawa Summit, and the issuance of the new bill.

Many economists are skeptical about the 2,000-yen bill's impact on economic activity, but businesses are generally optimistic, saying they will do what they can to make the most of it.

Trends in JapanEdited by Japan Echo Inc. based on domestic Japanese news sources. Articles presented here are offered for reference purposes and do not necessarily represent the policy or views of the Japanese Government.