Japan agencies plan blockchain study for instant stock and bond settlement

Japan is preparing to establish a payment infrastructure for the instantaneous settlement of stock and Japanese government bond transactions using blockchain technology, the Nikkei newspaper reported. The Financial Services Agency, the Ministry of Finance, and the Bank of Japan, along with financial institutions, are launching a study group this summer. The agencies are expected to formulate a development plan by the start of 2027, at the earliest.

The proposed plan is set to address the design of the blockchain, the division of responsibilities among the participating agencies and institutions, and a roadmap for future operations. If formally approved, the system could be up and running in the early 2030s. The report noted that the instant payment system might also extend to international remittances.

Currently, cash settlement for stock trades in Japan occurs two days after execution, while Japanese government bond transactions settle the day after. A real-time settlement system would close the gap between trade execution and cash settlement. This structure would allow investors to reinvest proceeds from asset sales almost simultaneously with the trade.