Japan Eyes 24/7 Blockchain Settlement for Bonds and Stocks in Landmark Financial Overhaul

• Japan plans to explore blockchain infrastructure enabling instant, 24/7 settlement of government bonds and stocks.

• The FSA, Finance Ministry, Bank of Japan, and financial institutions aim to finalize a development plan in early 2027.

• The system could eliminate current settlement delays, reduce counterparty risk, and eventually support international remittances.

Japan is preparing a blockchain-based financial infrastructure that could enable instantaneous, around-the-clock settlement of government bonds and stocks, marking a significant step toward modernizing one of the world’s largest financial markets.

The Financial Services Agency, Ministry of Finance, Bank of Japan, and major financial institutions are expected to establish a study group this summer The participants aim to formulate a development plan as early as the beginning of 2027

The plan will address the blockchain architecture, the division of responsibilities between public authorities and private institutions, and a roadmap for implementation.

Subject to formal approval, the infrastructure could become operational within several years, potentially as early as the early 2030s.

<a href="https://www.ccn.com/news/crypto/japan-classifies-crypto-financial-instrument-historic-shift/" rel="nofollow noopener” target=”_blank”>Japan has already conducted experiments involving distributed ledger technology. However, the latest initiative is reportedly the first to establish a clear timeline for developing a production-ready system.

Blockchain Could Eliminate Settlement Delays

Under Japan’s existing market structure, stock transactions typically settle two business days after execution, while Japanese government bond trades settle the following business day. This creates a delay between agreeing to a transaction and completing the transfer of cash and securities.

A blockchain-based system could reduce that gap by recording ownership changes and payments on shared digital infrastructure.

In principle, investors could receive and reinvest the proceeds from an asset sale almost immediately, rather than waiting one or two working days.

Faster settlement could also reduce counterparty exposure, release capital tied up during the settlement period, and improve market efficiency. The initiative may eventually expand beyond domestic securities to areas such as international remittances.

However, continuous settlement would require more than a technical upgrade.

Banks, brokerages, and other institutions would need access to cash and collateral outside conventional business hours. Regulators would also need to determine how the system handles custody, cybersecurity, operational failures, and transaction finality.

Source: finance.yahoo.com