The Bank of Japan will test blockchain technology to account for deposits held by financial institutions at the central bank, Governor Kazuo Ueda, the central bank’s chief from 2023, announced the initiative at the FIN/SUM 2026 conference in Tokyo.
The initiative is part of a sandbox project designed to review the use of central bank money for multiple settlement operations, including domestic interbank and securities transactions.
Internationally, the BOJ has participated in Project Agora, an experiment with several central banks and financial institutions to develop tokenized central bank deposits that could facilitate cross-border payments.
The project brought together a number of central banks and major financial institutions to explore how smart contracts and atomic transactions could simplify international payments. Under the proposed framework, participating central banks would issue tokenized versions of their holdings on distributed ledgers.
“Central bank money fulfills its role as an anchor of confidence for the economy by connecting all means of payment and acts as the safest and most liquid settlement asset,” Ueda said.
The governor noted that distributed ledger technology has moved from experimentation to active deployment in financial services. He pointed to DeFi protocols as proof of blockchain’s high programmability.
The BoJ has launched a retail digital currency trial in 2023 to assess the technical requirements for digital currency issuance, although no decision has been made on mass distribution. Japan’s continued preference for physical currency has created a cautious attitude.
Ueda emphasized the need for interoperability as multiple blockchain networks emerge alongside traditional payment rails. Without the involvement of the central bank, he warned, users could perceive a difference in value between means of payment in separate systems.
The governor also noted potential synergies between artificial intelligence and distributed ledgers, citing AI advisory services and automated collateral management as emerging applications that could tap into transaction data stored on the chain.
