Japan Explores Blockchain-Based Instant Settlement for Stocks and Bonds
Japan's government is exploring the possibility of using blockchain technology to facilitate instant settlement of stocks and government bonds. A study group has been formed, and a development plan is expected in early 2027, with an operational launch targeted for the early 2030s.
The current settlement process takes two business days for Japanese equities and one day for government bonds, which is the global norm. The proposed blockchain-based system would eliminate the need for counterparty risk and reduce the time it takes to settle transactions.
What's notable about this proposal is that it focuses on wholesale settlement between institutions, rather than creating a retail central bank digital currency (CBDC). This approach avoids many of the concerns surrounding CBDCs, such as surveillance and disintermediation.
The project aims to keep Japanese markets competitive with those in the US and Europe, which are building out tokenized securities infrastructure. Japan's government bond market is one of the largest in the world, making this a significant move if implemented.