Bank of Japan Explores Blockchain-Based Settlements as Kazuo Ueda Signals Infrastructure Shift
The Bank of Japan (BOJ) is taking tangible steps toward embedding blockchain technology into the heart of its financial plumbing, marking one of its clearest signals yet that distributed ledger systems could play a role in future central bank operations.
Speaking Tuesday at the FIN/SUM conference in Tokyo, BOJ Governor Kazuo Ueda said central banks must prepare for a rapidly evolving financial architecture shaped by tokenization, programmability, and blockchain-based settlement networks. He described the shift as the emergence of a “new financial ecosystem” that could transform both payments and securities markets.
While emphasizing a measured approach, Ueda confirmed that the BOJ will begin experimenting with its current account deposits — the reserves commercial banks hold at the central bank. A dedicated sandbox project is being developed to test whether central bank money can function within blockchain-based systems.
The initiative aims to evaluate how tokenized reserves and smart contract functionality could enhance efficiency in domestic interbank transfers and securities settlement. By automating processes and reducing reconciliation layers, such systems could potentially speed up execution and reduce operational risk.
Ueda noted that the BOJ intends to collaborate with external experts as it studies how blockchain frameworks might connect with existing infrastructure. The experiments will also assess practical use cases, particularly in interbank and securities settlement environments.
Global Coordination Through Project Agora
The BOJ’s blockchain exploration also ties into broader international efforts. Japan is participating in Project Agora, an initiative led by the Bank for International Settlements that brings together multiple central banks to examine cross-border wholesale settlement using tokenized central bank money.
Under the framework being discussed, central banks could issue tokenized deposits on blockchain platforms, potentially embedding smart contract capabilities directly into wholesale central bank money. If successful, the model could streamline cross-border payments by reducing friction, settlement delays, and counterparty risks.
Ueda suggested that such developments could represent a meaningful innovation in global payment systems, particularly if interoperability across jurisdictions is achieved.
Retail CBDC Pilot Continues
Beyond wholesale experimentation, the BOJ is also advancing its pilot program for a potential retail central bank digital currency (CBDC). The central bank is currently testing core system infrastructure while running a CBDC Forum that includes private-sector participants contributing technical and operational expertise.
In its next phase, the BOJ plans to broaden discussions within the forum, shifting from purely technical design considerations to wider debates about the future structure of Japan’s payments ecosystem. However, no timeline has been provided for a formal launch decision.
Regulatory Backdrop Evolves
The BOJ’s blockchain push unfolds against a backdrop of broader regulatory reform in Japan’s digital asset landscape. In January, Finance Minister Satsuki Katayama expressed support for further integrating crypto assets into traditional financial markets, highlighting the importance of stock and commodity exchanges in expanding public access to blockchain-based instruments.
Meanwhile, in November 2025, Japan’s Financial Services Agency finalized plans to reclassify 105 cryptocurrencies — including Bitcoin and Ethereum — as financial products under existing regulatory frameworks, strengthening oversight and aligning digital assets more closely with conventional financial instruments.
Taken together, the BOJ’s blockchain experiments and Japan’s evolving regulatory stance signal a coordinated effort to modernize financial infrastructure while maintaining institutional safeguards — positioning the country as an active participant in the next phase of central bank innovation.