Japan targets early 2030s launch for blockchain-based stock and bond settlement system

Japan's financial regulators, the Bank of Japan (BOJ) and major financial institutions are planning to develop a national blockchain-based settlement infrastructure for stocks and Japanese government bonds (JGBs), the Nikkei reported Wednesday.

The Japanese Financial Services Agency (FSA), the Ministry of Finance and the Bank of Japan this summer plan to launch a group, which aims to begin work by early 2027.

If formally approved and testing goes as planned, operations of the new onchain system would kick off in the early 2030s, according to the report.

The plan is to get banks to convert a portion of the reserve accounts they hold at the BOJ into digital tokens. These would function as a wholesale central bank digital currency (CBDC), a digital representation of the local currency used only between financial institutions, not by individuals.

All banks in Japan use those accounts for interbank payment settlement. Stock trades in Tokyo currently settle two business days after execution. JGB trades settle the following day. The new infrastructure would cut both to near-zero, allowing investors to reinvest proceeds almost immediately.