Japan's Blockchain Settlement Network Aims for 24/7 Instant Trades
The Japanese government and financial institutions are working together to build a next-generation blockchain-based settlement network for stock and Japanese Government Bond (JGB) trades. The system, which is expected to launch in the early 2030s, will enable 24-hour real-time settlement of trades, eliminating the current two-day gap between execution and settlement.
The project involves converting part of the Bank of Japan's current-account deposits into digital tokens that can circulate on a blockchain. This would create a framework similar to a Central Bank Digital Currency (CBDC), but used for settlement between financial institutions rather than as electronic money for individuals.
Japan's three megabanks and major securities firms are already running pilot projects to manage and distribute tokenized stocks and government bonds on blockchain networks. The new system would serve as settlement infrastructure for processing payments for those tokenized securities in real-time.
The Japanese government is also considering using the technology for international remittances and cross-border payments in the future. With other countries, such as the US and Europe, already leading in securities tokenization and building next-generation international payment networks, Japan aims to avoid falling behind in the competition over financial-market infrastructure.