TOKYO — Japan’s National Security Council is enlarging its scope to monitor for broad economic risks in light of the changing global environment that has given rise to unconventional threats, such as the novel coronavirus pandemic.
The NSC has already highlighted several areas of concern, including the rise of digital currency and land acquisitions by foreigners, ahead of the launch next month of a dedicated economic team under the National Security Secretariat.
The new team is expected to work with different agencies to craft a comprehensive strategy. At a meeting last month, the team held broad discussions on currency, land deals and intellectual property.
China’s plans for a digital yuan is one of the biggest economic concerns on the NSC’s radar because it can potential shake up the current dollar-based global currency regime. The council, as well as Japan’s Finance Ministry and Financial Services Agency, plans to work more closely with U.S. authorities.
The Bank of Japan is conducting research with the European Central Bank and other monetary authorities into issuing their own digital currencies. The U.S. Federal Reserve for now is not working with international counterparts.
Last week, Japanese Vice Foreign Minister Norihiro Nakayama met U.S. Deputy Assistant Secretary of State Marc Knapper, urging the U.S. to cooperate with the BOJ, ECB and others on digital currencies. Knapper “acknowledged the importance of free economies working together against the digital yuan,” a Japanese government source said.
The U.S. sanctions state sponsors of terrorism and other countries by locking their banks out of SWIFT, the international settlement body for dollar-based transactions. A nondollar digital currency does not need to go through the framework, which would undermine future sanctions the U.S. could impose on China. Given Japan’s alliance with the U.S., this could affect Japan’s security as well.
The NSC is also concerned about security risks posed by foreigners purchasing land near defense facilities or with water sources and other resources.
“It was unclear who was in charge of what, so agencies weren’t taking initiative on this issue until now,” the government source said.
The Committee on Foreign Investment in the U.S. screens land sales to foreigners for potential security risks. Japan’s ruling Liberal Democratic Party wants to set up something similar.
As the government debate on national security extends beyond topics like exports of military technology or cybersecurity, Japan is planning to create a much broader security strategy that includes fields like 5G networks. Tokyo is rushing to secure experts and the necessary manpower to roll out the new strategy.
Growing economic frictions, particularly between the U.S. and China, means greater expertise will be needed to accurately decode the situation. The government will be forced to tap outside experts more to collect and analyze information regarding other countries.