Tokyo
CNN
—
Banks across Japan on Wednesday began refilling ATMs with shiny new yen notes from an unlikely source: the bright yellow-flowering paperbush shrub that grows in the rugged Himalayan mountains of Nepal.
Before finding its way into the wallets of Japanese consumers, yen notes undergo a long and complicated journey involving months of labor and thousands of kilometers of road and air transportation.
And the process has provided a potential new source of income for communities in one of the world’s poorest countries by providing cash to one of the world’s richest countries.
While Japan has been pushing for more digital payments in recent years, it remains cash-dominated and lags other Asian countries such as China, which is almost completely cashless.
“Cash is the foundation of the Japanese economy so I really think Nepal has contributed to the Japanese economy,” said Matsubara Tadashi, president of Kanpo, which produces paper for the Japanese government.
“Without Nepal, Japan would not function.”
The bush-to-beak trail begins in the foothills of the Nepalese Himalayas, near a town long known not for agriculture but as the gateway to Everest.
Each spring, the hills here are ablaze with yellow: the blossoms of the paperbush (also known as mitsumata, or algeri), a tree native to the Himalayas. According to the Can Tho website, the bark of the mitsumata tree has long, strong fibers that make it perfect for making thin, durable paper.
It was once grown in Japan, but production has been gradually declining in recent years, Matsubara said. The work is hard in the countryside, and more people are moving from rural areas to bigger cities like Tokyo in search of work, causing villages to shrink and industry to decline.
“Currently, the number of farmers producing honeybees is decreasing,” Matsubara says.
The decline in rural population, exacerbated by Japan’s population crisis with a plummeting birth rate, also means that Paperbush farms have “no successors, no takers”, he added.
That’s where the Nepalese supply chain comes into play.
Kampou first came to Nepal in the 1990s for charity work, helping farmers dig wells. There, he discovered paperbush growing in the mountains as far as the eye could see. They began teaching farmers how to cultivate it, but initially only small amounts were produced and exported.
But over the next few years, as a honeybee shortage became apparent, Kampou and his Nepalese farmers increased production, eventually becoming the main source of Japanese yen banknotes.
It’s a long process, Matsubara says: Farmers plant the saplings in early summer, harvest the branches in autumn, and then spend several months processing the bark, which includes steaming, peeling, washing and drying.
Once the raw paper is completed in the winter, it is sent to Kathmandu, the capital of Nepal, then transported by car to the western Indian city of Kolkata, and from there by ship to Yokohama, Japan.
After inspection, the paper is further processed, printed, and cut into banknotes at the National Printing Bureau near Odawara city.
The new banknotes being distributed this week will reportedly have some new features. Bank of Japan To prevent counterfeiting, the banknote contains a number of holographic portraits of prominent historical figures, and when the banknote is moved, the portraits’ heads appear to rotate from side to side.
The central bank said that while other countries have used holograms on their banknotes before, this is the first time a holographic portrait has been used. Other features include parts of the note being printed with pearlescent and luminescent inks, as well as tactile markings for the visually impaired.
With the new banknotes beginning to circulate, demand for paper has increased, and Matsubara said the new notes appear to use more raw materials than the old ones.
In 2022, paper products and waste paper (including products other than the paper bushes used for banknotes) accounted for more than 9 percent of Nepal’s exports to Japan, worth $1.2 million, according to the Nepal Trade Statistics Bureau. Observatory of Economic Complexity (OEC) Visualize and deliver international trade data.
According to the Ministry of Economy, Trade and Industry, as of last year, more than 60% of transactions in Japan were conducted in cash, with the rest being made through digital payments or other methods.
Matsubara said profits from the sale of Paperbush were providing new sources of income for Nepalese communities. He argued that the growing industry was helping to build new facilities and infrastructure in Kampou’s partner villages, bringing new economic security to vulnerable families.
According to Matsubara, Kampo has also received financial assistance from the government’s Japan International Cooperation Agency (JICA) since 2016, enabling it to expand.
Matsubara said Kampo does not have data on the average income in its partner villages, but estimates that each household earns less than 10,000 yen (about $62) because there are no other major agricultural products at that altitude.
In 2015, the average monthly income for a rural household in Nepal was 27,511 Nepalese rupees (about $205). World Economic Database CEIC.
Meanwhile, recent paperbush harvested in Nepal’s Ilam district was sold to Japan for more than 180,000 yen (about $1,114), earning each of the six participating farmer groups in the district about 30,000 yen ($185), Matsubara said.
CNN was unable to independently verify Matsubara’s claims.
“Initially, this activity was about Japan’s assistance to Nepal. I think it’s different now… Nepalese people are working hard to help Japan,” he said.
“Without the Nepalese mitsumata, we would not have been able to produce new banknotes.”
