Bitcoin Contributes to the Growth in Japan’s GDP Figures
Japan is one country who has remained as an active participant in the cryptocurrency and blockchain revolution since the very beginning. In the last year of 2017, the Japanese government took several active measures like giving a legal status to Bitcoin as well as regulating the operations of exchanges.
In the last year, Japan has played a dominant role and contributed significantly with over 40% participation into digital currency ‘Bitcoin’. As per the latest research reports released by Nomura - one of the world’s largest investment banks, it seems that Japan’s active participation in Bitcoin market has really paid off well.
A similar report has also been published by Deutsche Bank AG which notes that Japan’s “retail investors are shifting from leveraged foreign-exchange trading to leveraged cryptocurrency trading.” A similar study done by Nikkei shows that Japanese investors have contributed nearly half of the world’s foreign exchange trades in last one year.
Two analysts from Nomura - Yoshiyuki Suimon and Kazuki Miyamoto have identified a Bitcoin “wealth effect” which can contribute to the economic prosperity of Japan. Many policymakers say that the “wealth effect” is considered as an important tool in influencing the economic activity. As the price of houses, stocks and other assets continue to increase, investors feel better off and are expected to spend more as a matter of the impulse response. This effect is transferred to other asset owners as well who start feeling richer and so their consumption habits get aligned with their new found wealth. This results in an increase in spending that triggers and stimulates the overall economic activity.
A team led by Yoshiyuki Suimon writes: “Rises in asset values often result in a rise in consumer spending, too, known as the wealth effect. We estimate the wealth effect from unrealized gains on bitcoin trading by Japanese investors since the start of fiscal year 2017, and estimate a potential boost to consumer spending of 23.2-96.0 billion yen.”
As majority of the price gains were experienced in 2017, Nomura expects the “wealth effect” to show noticeable results thereby raising the GDP of the country by 0.3%. Nomura has further stated “…the fact that the rise in bitcoin prices was concentrated in 2017 fourth quarter could result in the wealth effect materializing in 2018 first quarter… we estimate a potential boost to real GDP growth on an annualized quarter over quarter basis of up to about 0.3 percentage points.”
Well, it seems that Bitcoin has really proved to be a great booster to Japan’s economy and we can possibly see similar results derived by other countries as well.