Japan weighs blockchain fast lane for securities cash settlement

Japan is preparing a blockchain-based system that would enable immediate cash settlement of stock and Japanese government bond transactions at any time of day.

Study group to define the framework

The Financial Services Agency, Ministry of Finance, Bank of Japan and major financial institutions will form a study group this summer. The group will decide how the blockchain infrastructure should be built, allocate responsibilities between public agencies and private firms, and draft a development plan expected around early 2027.

Potential rollout timeline

If the plan receives formal approval, the system could be operational in the early 2030s.

How the system would work

The proposal calls for converting a portion of banks’ deposits held in Bank of Japan current accounts into digital tokens that could be transferred on a blockchain for inter‑bank settlement.

Current settlement practices

Today, equity trades in Japan settle on a T+2 schedule, while domestic government bond trades settle on T+1.