The Bank of Japan will conduct technical experiments using blockchain technology to settle the current account deposits that financial institutions hold at the central bank, BOJ Governor Kazuo Ueda announced. In a speech titled “The New Financial Ecosystem and the Role of Central Banks,” Ueda said a sandbox project is testing settlement using central bank money represented as current account deposits on a blockchain-based system.
The trials will examine how a blockchain settlement layer could connect with existing infrastructure and explore use cases such as domestic interbank settlement and securities settlement. The work is narrowly focused on technical feasibility for settling using BOJ-held current account deposits and is framed as a controlled experiment supported by external experts — not as an immediate policy change or rollout.
A key element of the sandbox is studying interoperability with the Bank of Japan Financial Network System (BOJ-NET). Findings from the experiment may inform improvements to BOJ-NET and help determine how distributed ledgers could coexist with or augment current payment and settlement rails.
Ueda also flagged possible synergies between blockchain and artificial intelligence, suggesting combined use of transaction and settlement data recorded on distributed systems could enable enhanced financial services. He warned, however, that poorly designed smart contracts or inadequate implementation could pose risks to the stability of financial markets and payment systems, underscoring the need for careful technical and operational safeguards.
The initiative comes as Japan continues to refine its digital asset rules. In 2025 the Financial Services Agency held public consultations on reclassifying some tokens under the Financial Instruments and Exchange Act, which could subject certain digital assets to securities-style disclosure and market-conduct requirements. The government has promoted blockchain and tokenization as part of its “New Capitalism 2025” strategy, positioning digital infrastructure as central to financial modernization.
Private-sector activity in Japan has also accelerated. On Oct. 27, 2025, stablecoin issuer JPYC launched a yen-backed stablecoin under the revised Payment Services Act, which recognizes stablecoins as electronic payment instruments. Sony Bank and JPYC signed a memorandum of understanding to study real-time transfers that would let customers purchase yen-backed stablecoins directly from bank accounts.
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