QuestionWho issues Japanese banknotes?

History of the Bank Becoming the Sole Issuer of Japanese Banknotes

(1) Issuance of government notes and the national bank notes

During the Edo period (1603-1867), various types of currencies -- such as gold, silver, and copper coins, as well as local notes issued by clans in their respective regions -- were used as cash. Exchange rates between these currencies changed on a daily basis.

After the Meiji Restoration, the new government implemented various reforms regarding the currency system as part of a move toward modernization. To begin with, the government itself issued government notes in 1868.

In 1871, the government enacted the New Currency Act and, for the first time, introduced the yen as the new currency unit.

Moreover, in 1872, the government formulated a system of national banks. These banks were private banks but were given the authority to issue notes by the government, and each national bank began issuing national bank notes. By 1879, 153 national banks were established in which national bank notes were issued.

(2) Outbreak of the Seinan Civil War and ensuing inflation

With the outbreak of the Seinan Civil War in 1877, the government escalated the issuance of government notes to finance war spending, and also borrowed national bank notes from national banks for war-related payments. This resulted in rampant inflation.

As a means to overcome this inflation, it became widely recognized that the establishment of a centralized system for issuing notes was essential in order to prevent excessive issuance of notes and to ensure stability in the value of the currency.

(3) Establishment of the Bank and the issuance of the Bank of Japan notes

In 1882, the Bank was established as the sole central bank of Japan, and then became the sole issuer of Japanese banknotes. In May 1884, the Convertible Banknote Act was enacted, and a year later in May 1885, old ten yen notes were issued as the first Bank of Japan notes.

Since then, the Bank has been the sole issuer of Japanese banknotes.

Related Information

• Bank of Japan Act (Link to an external website)