TL;DR:
- The Bank of Japan launched blockchain technology experiments to settle deposits held in current accounts at the central bank.
- Governor Kazuo Ueda warned about risks in smart contract design that could threaten the stability of payment systems.
- Japan is also advancing in the stablecoin market: JPYC launched the first yen-backed stablecoin.
The Bank of Japan announced it will conduct technical experiments with blockchain technology to settle deposits that financial institutions hold in current accounts at the central bank.
Governor Kazuo Ueda presented the initiative in a speech titled “The New Financial Ecosystem and the Role of Central Banks“, where he detailed that the project takes place in a sandbox environment designed for controlled testing and does not involve a monetary policy deployment.
The sandbox aims to explore concrete use cases, including domestic interbank settlement and securities settlement. Ueda specified that the experiments will analyze connection methods with existing infrastructure, including the BOJ-NET system, the Bank of Japan’s financial network. The project’s results could, according to the governor, be used to improve the functioning of that platform.
Risks in Smart Contract Design
Ueda did not shy away from pointing out the model’s tensions. He warned that when the design of smart contracts is inadequate, there is a risk that the stability of financial markets and payment systems could be compromised. The central bank plans to move forward with the support of external experts, prioritizing a rigorous technical approach before advancing toward any operational application.
The governor also noted that the integration of artificial intelligence and blockchain could deliver more advanced financial services, built on transaction and settlement data recorded in distributed systems.
AI and Blockchain Are the FUTURE OF THE NEW CAPITALISM
Japan is modifying its regulatory framework for digital assets. The Financial Services Agency conducted public consultations in 2025 on the reclassification of certain tokens under the Financial Instruments and Exchange Act, which could subject them to disclosure standards similar to those applied to securities. The government has also positioned blockchain and tokenization as pillars of its “New Capitalism 2025” financial modernization strategy.
On another front, JPYC launched the first yen-backed stablecoin under the revised Payment Services Act. Days later, Sony Bank and JPYC signed a memorandum of understanding to study real-time transfers that would allow customers to acquire yen-denominated stablecoins directly from their bank accounts.
