Amid the yen’s appreciation on 7 September, it was clarified that JPYC and PayPay Balances do not constitute “money” in the Bank of Japan’s money stock statistics, prompting discussion of how their backing assets are managed and their regulatory classification. Attention will focus going forward on developments in the management of JPYSC’s backing assets and the Bank of Japan’s meetings.
On 7 September, the yen’s movements drew attention after it briefly surged to the low ¥154 range. This article focuses on the difference between the quantity of yen and its price, explaining that JPYC and PayPay Balances are not included as money in the statistics.
In the Bank of Japan’s money stock statistics, the money-issuing entities are the Bank of Japan and all deposit-taking institutions, while JPYC, issued by a funds transfer service provider, and PayPay Balances, issued by an issuer of prepaid payment instruments, are outside the scope of the statistics. Accordingly, neither JPYC nor PayPay Balances is included in M1, M2, M3 or broad liquidity, and even if users purchase them with bank deposits, the transaction does not affect the total amount recorded in the statistics.
It is pointed out that the statistical treatment depends not on whether the amount issued increases, but on the combination of the entities holding the funds and the backing assets. JPYC is an asset held by a general corporation, and JPYC balances themselves are not included among the products comprising the statistics. The explanation continues that, depending on how backing assets such as government bonds and trust assets are managed, they may affect asset transfers within broad liquidity.
The market impact of yen-denominated stablecoins varies depending on the nature of the issuer and the policies governing the management of the backing assets. While they are classified as not constituting credit creation and not involving the creation of new deposits, the risk of outflows from bank deposits and their function as an ordinary means of payment remain subjects of discussion. Developments in the market are continuing, including SBI’s announcement that it had begun investing part of JPYSC’s backing assets in short-term government bonds.
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