Bank of Japan launches experiment in blockchain-based reserve settlement

Source

Minseung Kang

Summary

The Bank of Japan said it is pursuing a sandbox project that applies blockchain technology to central-bank reserve settlements.
It said the experiment stems from the view that tokenization, programmability and blockchain settlement architectures could reshape payments and settlement and securities markets.
The Japanese government said it has finalized a plan to reclassify major digital assets, including Bitcoin and Ethereum, under the existing financial product regulatory framework as it refines the digital-asset regime.

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The Bank of Japan (BOJ) is testing how blockchain technology could be used for central-bank reserve settlements.

According to The Block, a digital-asset (cryptocurrency) news outlet, BOJ Governor Kazuo Ueda said in a speech at the “FIN/SUM” conference in Tokyo on the 3rd, “We plan to run experiments to see whether central-bank money can operate on blockchain-based systems.”

Ueda explained that the BOJ is pursuing a sandbox project focused on BOJ current accounts—reserves that financial institutions deposit at the central bank. The move reflects a view that tokenization, programmability and blockchain settlement architectures could potentially reshape future payment and settlement systems and securities markets.

He said, “While exploring ways to connect with existing systems, we will examine use cases such as interbank domestic settlements and securities settlement,” adding, “We will make further progress with support from external experts.”

The experiment also aligns with “Project Agora,” led by the Bank for International Settlements (BIS). The initiative involves multiple central banks and studies cross-border wholesale settlement models using tokenized central-bank money. Japan is among the participating countries.

Ueda said, “If the project becomes reality, it could bring innovation in simplifying cross-border payments and settlement.”

Separately, the BOJ is continuing a pilot program to assess the potential introduction of a retail central bank digital currency (CBDC). Through a CBDC forum run with the private sector, it is reviewing technical and operational issues, and plans to broaden the scope of discussions beyond technical design to the future of payments and settlement overall. It did not present a specific timeline.

The Japanese government has also recently accelerated efforts to refine the regulatory framework for digital assets. The finance minister has cited the need to integrate traditional financial markets with digital assets, and the Financial Services Agency has finalized a plan to reclassify major digital assets—including Bitcoin and Ethereum—under the existing regulatory framework for financial products.