Introducing regional currency in public-private partnership boosts actfulness


Reiri Hayakawa
Innovation Service Creation Division


  • Regional currencies have gained steam as a way to enhance wellbeing and resolve local issues
  • Two factors determine the success of a digital-regional-currency program: user growth and the sustainability of operating schemes
  • Local governments and local companies serve the same people and must forge a way to bundle their services together

Regional currencies and point systems as actfulness services

Interventions to encourage individuals to modify their behavior are recently on the rise in a bid to revitalize regional economies hit hard by covid as well as address issues such as carbon neutrality and SDGs. These efforts feature regional digital currencies and incentives such as point rewards.

They also encourage more engagement between individuals and the community and spur action of benefit to the social good. Intended to help enhance personal wellbeing as well as create value for local communities, they are examples of the real-world application of actfulness* services—those designed to enhance the value of and create multifarious opportunities for activity.

As a means of helping to address such regional issues, MRI has developed a proprietary digital regional currency platform, Region Ring®. The service has been rolled out with private-sector players whose business operations and customers are based regionally—companies like railroads, electricity and gas utilities, financial institutions, and real-estate developers—as well as with local governments. Initiatives have included regional currencies and gift coupons such as Kintetsu Harukas Coin and Kinshachi Money as well as SDG reward-point programs such as the ACT5 Member Points§ scheme.

*This is a Mitsubishi Research Institute original concept that refers to connecting people, through services such as transit, to create opportunities for and improve the value of activities that are in line with personal values and the community

Kintetsu Group Holdings ran a local-currency pilot study in FY2017 and FY2018

Digital purchase vouchers the city of Nagoya plans to issue starting in FY2022

§Starting in FY2021, implemented by the Daimaruyu SDGs ACT5 implementation committee in Tokyo’s Otemachi, Marunouchi, and Yurakucho districts (known collectively in Japanese as the Daimaruyu area).

Rapid rollout and sustainable schemes critical

We have learned from our own experience and observation of similar endeavors that regional digital currency services require two crucial elements to succeed.

First, when a currency is rolled out stores and businesses must take it up and users must be added immediately. The benefits will be piddling for local businesses if a sufficient number of users don’t have the currency in hand, and customers will not use the currency if there are no attractive stores to accept it. This makes rapid rollout and uptake critical. And this is not merely a matter of letting abundant funding do the talking: digitally unsavvy customers are hard to recruit, and there is a plethora of competing cashless payment methods.

Second, sustainability is paramount for the operational scheme. Behind this should be sufficient funding and the proper organizational setup. If a local government is running it, even if it is initially able to secure budget funding to deploy the necessary systems, gain the participation of an operator, and offer incentives, unless it can demonstrate cost effectiveness, the scheme could be doomed. We have observed many instances where budgets have shrunk year to year, with initiatives ultimately ending as nothing more than a failed pilot project. For a private-sector project, the companies behind it need to clearly position it as either a profit-generating or community-service undertaking; otherwise it will be difficult to sustain long term despite government subsidies.

Bundling both public and private services in a common platform is key

Crucial in overcoming these challenges is the overlap between the area local governments serve and the area local businesses’ customers live in.

Traditionally, local governments have used paper forms to issue vouchers for local purchases, reward points, and payments to residents. Recent years have seen a substantial shift to using digital means for these. For example, Nagoya issued electronic vouchers for local purchases in FY2022—Japan’s largest such initiative (as of May 2022).

There are already multiple examples of services that help revitalize their communities in addition to their standard functions such as communication. Companies with deep community roots often provide customers with points for making purchases at their own businesses. Tokyu Corporation runs an app called common intended to provide the communities along its train lines with a space for residents to help one another. There has, however, been a proliferation of apps, making it harder for these new moves to acquire users.

Customer acquisition can be optimized by offering users with a singular platform for services from both local businesses and government. This one-stop interface is now feasible thanks to advances in digital technologies that have made it easy to link and integrate services. For success in such initiatives, we propose a partnership with companies close to the community providing a digital currency platform and local government helping to increase users through government benefits and initiatives to stimulate spending (figure).
[Figure] Regional digital currency platform bundles services of local governments and companies
[Figure] Regional digital currency platform bundles services of local governments and companies
Source: Mitsubishi Research Institute, Inc.
From a user perspective, this type of platform provides a range of discoveries and new opportunities for activity on a single app, increasing convenience and satisfaction. For local governments, paying to use a private-sector platform costs less and is more effective than developing one in house; it thus becomes possible to provide municipal services sustainably. For the private sector, municipal services offer an effective chance to engage with users, contributing to business development and revitalization of the community.

For society as a whole, when private- and public-sector participants attract users to each other’s services, more people will undertake activities that lead to actfulness, and the total amount of activity across society will grow. These trends will contribute to developing better individuals, communities, and society. Actfulness will be propelled by public–private collaboration aimed at fostering personal well-being and resolving local societal issues. Digital regional currency will put this collaboration, and these larger trends, into motion.