Japan Sets Sights on Blockchain-Powered Cash Settlement
Japan's financial institutions are teaming up to create a blockchain-based system for immediate cash settlement of stock and bond transactions. The system, expected to launch in the early 2030s, will convert bank deposits into digital tokens that can be used on the blockchain for interbank settlement.
The Financial Services Agency, Ministry of Finance, Bank of Japan (BOJ), and financial institutions plan to establish a study group this summer to decide how to build the infrastructure. They will divide responsibilities between public agencies and financial institutions and produce a development plan by 2027.
Japan's current settlement process for regular equity trades settles on T+2, while domestic government bond trades settle on T+1. The proposed blockchain system aims to improve this process by enabling immediate cash settlement at any time of day.