According to BOJ Governor Kazuo Ueda, the Bank of Japan is conducting technical experiments using blockchain technology to settle deposits held by financial institutions at the central bank.
In a speech released Tuesday titled “The New Financial Ecosystem and the Role of Central Banks,” Ueda said a sandbox project to test settlements using central bank money “in the form of current account deposits in a system that uses blockchain” is underway.
The experiments will explore “methods of integration with the existing system” and use cases, including “interbank settlements and securities settlements.”
The project focuses on settlements using central bank current account deposits held by financial institutions at the BOJ. Ueda said the BOJ plans to continue with the support of outside experts, framing the work as a controlled technical test rather than policymaking.
Sandbox aims to coordinate and design settlement
The sandbox explores interoperability with existing systems, including the Bank of Japan’s Financial Network System, known as BOJ-NET. Ueda said the project’s insights could also be used to improve BOJ-NET.
Ueda added that the integration of artificial intelligence and blockchain could enable improved financial services based on transaction and settlement data recorded in distributed systems.
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Ueda also warned of design risks associated with smart contracts. “When the design of smart contracts is inadequate, there is a risk of threatening the stability of financial markets and payment systems,” he said.
A broader framework for Japanese digital assets
The sand comes as Japan improves its regulatory framework for digital assets.
In 2025, the Financial Services Agency held public consultations on the reclassification of certain tokens under the Financial Instruments and Exchange Act, a move that could subject selected digital assets to securities disclosure and market conduct rules.
The government has also developed blockchain and tokenization as part of its broader New Capitalism 2025 development strategy, positioning digital infrastructure as a pillar of financial modernization.
Japan is also expanding stablecoin integration at the private sector level. On October 27, 2025, the JPYC launched the first yen-backed stablecoins in Japan under the country’s revised Payment Services Act, which recognizes stablecoins as electronic payment instruments.
On March 2, Sony Bank and stablecoin issuer JPYC signed a memorandum of understanding to explore real-time transfers that will allow customers to buy yen-backed stablecoins directly from bank accounts.
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