Japan Unveils Plan to Tokenize Commercial Banks' Deposits on Blockchain

Japan is pushing forward on an ambitious project to create a blockchain-based system for trading stocks and Japanese government bonds (JGBs). The goal is to shorten settlement times, which currently take two business days for stocks and one day for JGBs. This infrastructure would also enable the tokenization of commercial banks' deposits at the Bank of Japan, creating a wholesale central bank digital currency (CBDC) used only for settlement between financial institutions.

The project involves the Financial Services Agency, the Finance Ministry, and the Bank of Japan, which plan to launch a consultative body to develop this system. The group could begin full-scale development as early as next year, with the new on-chain settlement system set to launch in the early 2030s.

The Bank of Japan is also participating in Project Agorá, led by the Bank for International Settlements, which includes seven major central banks and over 40 financial firms testing cross-border payments using tokenization technology.