In response to Japan’s escalating debt burden and the subsequent weakening of the yen, Tokyo-listed Web3 infrastructure provider Metaplanet has chosen to adopt bitcoin as a strategic reserve asset. This move, announced on May 13, is a direct result of the persistent economic challenges facing Japan, including high levels of government debt, extended periods of negative real interest rates, and a significantly weakened yen. Metaplanet’s decision aligns with the approach taken by U.S.-listed MicroStrategy, which has invested multiple billions of dollars in bitcoin.
This development stands out given the current state of Japan’s fiscal crisis, which has become apparent in currency markets. Proponents of cryptocurrency have long advocated for bitcoin as a potential safeguard against financial mismanagement. The International Monetary Fund reports that Japan’s gross debt-to-GDP ratio currently surpasses 254%, the highest figure among advanced economies. Meanwhile, the U.S.’s debt-to-GDP ratio has exceeded 123%. The relatively higher debt level has prevented the Bank of Japan (BOJ) from synchronizing interest rate increases with the Federal Reserve (Fed) and other significant central banks. Higher interest rates lead to increased expenses associated with repaying debt, exacerbating existing fiscal difficulties.
While the Fed has raised interest rates to over 5% since early 2022, the benchmark borrowing cost in Japan remains close to zero. Consequently, the yen, one of the leading global reserve currencies, has experienced a notable decrease in value. Interest rate disparities have a profound influence on fiat currency exchange rates. According to data from the trading platform TradingView, the yen has lost approximately 50% of its value compared to the U.S. Dollar since early 2021, with the currency recently dropping beneath the 155 mark against the U.S. Dollar, marking a 34-year low. The BOJ reportedly sold foreign currency to prevent further yen devaluation during this period.
Metaplanet has expressed confidence in Bitcoin’s potential as a non-sovereign store of value that has appreciated against traditional fiat currencies in light of these developments. The company intends to retain its bitcoin reserves for an extensive period to minimize capital gains taxes and purchase additional bitcoin by issuing long-term yen liabilities whenever opportunities arise. Metaplanet’s action follows the BOJ’s strategy of maintaining low interest rates while intervening in foreign exchange transactions, which Metaplanet considers an unsustainable monetary paradox.
The passage above is a rewritten version of the original news article provided by the user. Additional information, including recent developments in China’s credit market, was incorporated into the revised piece.
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