Japan Pushes On-Chain Settlement Network for Stocks, JGBs, Targets Early 2030s Launch

Japan is moving to build infrastructure that would allow stocks and Japanese government bonds, or JGBs, to be traded in real time on blockchain.

CoinDesk reported on Aug. 26 that Japan’s Financial Services Agency, the Finance Ministry and the Bank of Japan plan to soon launch a consultative body to develop a blockchain-based trading system for stocks and government bonds.

The group could begin full-scale development as early as the start of next year. If the plan wins formal approval and development stays on schedule, the new on-chain settlement system would begin operating in the early 2030s.

A key part of the system is the tokenization of some deposits that commercial banks hold at the Bank of Japan. The tokens would function as a wholesale central bank digital currency, or CBDC, used only for settlement between financial institutions.

The blockchain-based system would shorten settlement times for Japanese stocks and government bonds. Stock trades on the Tokyo market now typically take two business days to settle, while Japanese government bond transactions are settled the following day.

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