Japan Tackles Blockchain for Government Bond Settlement

The Japanese Ministry of Finance is taking steps to modernize its government bond settlement process by launching a study group to explore the feasibility of using blockchain technology.

The 'Study Group on On-Chain Settlement of Government Bonds' will examine the benefits and challenges of real-time settlement, which could potentially settle transactions instantly, 24 hours a day. The group, chaired by the Deputy Director-General of the Ministry's Financial Bureau, will meet for the first time on October 8.

The study group will also consider how to integrate blockchain technology with existing systems, as well as the potential benefits of on-chain finance, such as improved productivity and increased investor convenience. The Ministry has noted that it will draw on examples from overseas, including the use of blockchain in money market funds in the United States.

The Japanese government's efforts to modernize its securities settlement infrastructure are being led by a public-private council, which aims to promote 'on-chain finance' and create a roadmap for infrastructure development. The council has set a goal of formulating a plan by early 2027 and has identified key focal points, including system investments at the Bank of Japan and commercial banks.