Japan Expands Blockchain Payment Infrastructure, Including Government Bond Repo
Japan is expanding its proof-of-concept for stock and government bond payment infrastructure utilizing blockchain technology. The core discussion revolves around whether payments can be reduced to near real-time and whether the transfer of securities rights can be integrated with fund settlements. Japanese financial authorities, the Bank of Japan, and major financial institutions are discussing the commercialization of blockchain-based payment infrastructure with a target set for the 2030s. The Financial Services Agency of Japan has selected five institutions, including Nomura Securities and Daiwa Securities, as the second support recipients for the Payment Innovation Project (PIP). This proof-of-concept examines whether the transfer of rights for government bonds, stocks, investment trusts, and corporate bonds can be processed via blockchain, and it also includes plans for integration with stablecoin payments. The Governor of the Bank of Japan has stated that experiments are underway using central bank deposits for payment technology within a blockchain system. The settlement structure of the Japanese securities market has been operating on a T+2 basis since 2019, while the settlement for Japanese government bonds has been shortened to T+1 since 2018. Mitsubishi UFJ Trust and Banking Corporation has announced the commencement of an on-chain proof-of-concept for Japanese government bond repo transactions utilizing the Canton Network in collaboration with Digital Asset and Progmat. The Payment Innovation Project serves as a support framework from the Financial Services Agency of Japan to reduce legal interpretation and supervisory issues, while the Bank of Japan's sandbox is a mechanism to test the connection between existing payment networks and blockchain systems.
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