In a country where vending machines are so abundant, the introduction of new bank notes can have a measurable positive impact on the economy, even though it won’t drastically improve the overall economic climate.
According to estimates by Dai-ichi Life Research Institute, the new bills to be put into circulation Nov. 1 will have an economic effect totaling around 1 trillion yen, with 60 percent of it stemming from upgrading existing vending machines and purchasing new ones that can take the new bills.
About 15 percent of the total economic effect will stem from similar needs to modify automated teller machines and cash dispensers, and the remainder from printing the new bills themselves.
As preparations for the introduction of the new 1,000 yen, 5,000 yen and 10,000 yen bank notes are already under way, the total economic effect of 990.5 billion yen — which translates into a 0.2 percent rise in gross domestic product in nominal terms — spans the two years through the end of next March, the research institute said.
Japan has the largest number of vending machines in the world when taking population and total land area into account, according to the Japan Vending Machine Manufacturers Association.
There were about 5.5 million vending machines in Japan as of the end of December, according to the association. About half of the machines sell beverages while the others sell a wide range of items, including cigarettes, snacks, socks and flowers.
Although there are no official statistics available, at least half of all the vending machines in Japan are believed to be able to take bills, while the rest only take coins.
On the assumption that about 2.78 million vending machines, or 50 percent of the total, need to be modified for the new bills at a cost of 45,000 yen each, the economic effect would come to around 488 billion yen, according to the institute.
In addition to those needing upgrades, the institute estimates that 30 percent of the total will be replaced with new ones at a cost of around 450,000 yen on average, creating an economic effect of about 114 billion yen.
Economic effects stemming from demand for new vending machines have already surfaced.
Glory Ltd., Japan’s largest manufacturer of money-handling machines, including cigarette machines and coin-operated lockers, said earlier this month that it posted a group pretax profit of 12.80 billion yen in the April-June quarter, compared with 1.51 billion yen in profit a year earlier.
The company, which has a 50 percent-plus share in the domestic market, also revised its earnings forecast for the full business year through next March 31 to a group net profit of 12.5 billion yen on group sales of 156 billion yen, up from an earlier estimated group net profit of 9 billion yen on sales of 145 billion yen.
Glory attributes the upbeat earnings to strong demand for machinery that can handle the new bank notes.
The institute estimates that the economic effect linked to upgrades and purchases of ATMs and cash dispensers will come to 147.4 billion yen.
It assumed that about 30 percent of the roughly 152,000 ATMs and cash dispensers in Japan will be purchased at a cost of about 2 million yen on average, while the rest will be upgraded at a cost of about 200,000 yen each.
The economic effect linked to printing the notes is expected to come to around 241 billion yen, the institute said.
“The economic effect of the issuance of the new bills will unlikely be one that will have a determining effect on the overall economy,” said Toshihiro Nagahama, senior economist at Dai-ichi Life Research Institute.
“But there is a large possibility that the total economic effect will be larger if consumer spending increases due to reasons such as spending money at special sales organized by department stores to commemorate the issuance of the new bank notes,” Nagahama said.
Consumers are already snapping up products featuring the new notes.
Tokiwa Sogo Service, a Tokyo-based company that recently began selling face towels, bath towels and biscuits that carry the same designs as those on the new 1,000 yen, 5,000 yen and 10,000 yen notes, is seeing its products become hot sellers.
“Products featuring the new bank notes are selling surprisingly well, becoming hit items for us,” a Tokiwa Sogo Service spokesman said. “We believe the products are popular because they are still rare.”
Riding on the popularity of products already launched, the company plans to begin selling rice crackers that feature the bank notes, the spokesman said.
The new notes, which have holograms and other up-to-date technology to prevent forgery, were originally scheduled to go into circulation in July.
The release was postponed due to work on designing a portrait of Meiji Era novelist Ichiyo Higuchi (1872-1896) for the 5,000 yen bill, which took longer than expected. The 10,000 yen bills will feature educator Yukichi Fukuzawa (1835-1901), while 1,000 yen bills will feature microbiologist Hideyo Noguchi (1876-1928).
It marks the first redesign of the bills since November 1984.
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