Japan weighs blockchain fast lane for securities cash settlement

The FSA, Finance Ministry, BOJ and financial institutions plan to study the infrastructure and produce a development plan by early 2027.

Japan is reportedly preparing a blockchain-based system intended to enable immediate cash settlement of stock and Japanese government bond transactions at any time of day.

The Financial Services Agency, Ministry of Finance, Bank of Japan (BOJ) and financial institutions plan to establish a study group this summer, Nikkei reported Wednesday.

The group is expected to decide how the blockchain-based infrastructure will be built, divide responsibilities between public agencies and financial institutions, and produce a development plan around the beginning of 2027. 

If formally approved, the system could begin operating in the early 2030s.

The proposed system would convert some of the deposits banks hold in BOJ current accounts into digital tokens that could circulate on the blockchain for interbank settlement.

Regular equity trades in Japan settle on T+2, while domestic government bond trades settle on T+1.

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• Japan
• Bank of Japan
• Banks
• Bonds
• Central Bank
• Blockchain