Japan weighs tokenized BOJ deposits for faster settlement

Japan is reportedly weighing a blockchain-based system for immediate cash settlement of stock and Japanese government bond transactions at any time of day. The proposed system would convert some deposits held by banks in BOJ current accounts into digital tokens. The tokens could circulate on the blockchain for interbank settlement. The FSA, Finance Ministry, BOJ and financial institutions plan to establish a study group this summer. Nikkei reported that the group is expected to decide how the infrastructure will be built. The group is expected to divide responsibilities between public agencies and financial institutions. The group plans to produce a development plan by early 2027. The system could begin operating in the early 2030s if it receives formal approval. Regular equity trades in Japan settle on T+2. Domestic government bond trades settle on T+1.