BOJ Tests Blockchain for Bank Reserve Settlement

The Bank of Japan will conduct technical experiments using blockchain technology to settle deposits held at the central bank by financial institutions, according to BOJ Governor Kazuo Ueda. 

In a speech posted Tuesday titled “The New Financial Ecosystem and the Role of Central Banks,” Ueda said a sandbox project is underway to test settlement using central bank money “in the form of current account deposits on a system that uses blockchains.”

The experiments will explore “methods of connection with the existing system” and examine use cases, including “domestic interbank settlement and securities settlement.”

The project centers on settlement using central bank current account deposits, which are held by financial institutions at the BOJ. Ueda said the BOJ plans to proceed with support from external experts, framing the work as a controlled technical test rather than a policy rollout.

Sandbox targets interoperability and settlement design

The sandbox will study interoperability with current systems, including the Bank of Japan Financial Network System, known as BOJ-NET. Ueda said insights from the project could also be used to improve BOJ-NET.

Ueda added that integrating artificial intelligence and blockchain could enable enhanced financial services built on transaction and settlement data recorded on distributed systems.

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Ueda also warned of design risks tied to smart contracts. “When the design of the smart contracts is inadequate, however, there is a risk that the stability of financial markets and payment systems will be threatened,” he said.

Japan’s broader digital asset framework

The sandbox comes as Japan refines its digital asset regulatory framework.

In 2025, the Financial Services Agency held public consultations on reclassifying certain tokens under the Financial Instruments and Exchange Act, a move that could subject select digital assets to securities-style disclosure and market conduct rules.

The government has also framed blockchain and tokenization as part of its broader “New Capitalism 2025” growth strategy, positioning digital infrastructure as a pillar of financial modernization.

Japan is also expanding stablecoin integration at the private sector level. On Oct. 27, 2025, JPYC launched Japan’s first yen-backed stablecoin 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 study real-time transfers enabling customers to purchase yen-backed stablecoins directly from bank accounts.