Bank of Japan to test blockchain-based reserve settlement: Governor Ueda

The Bank of Japan is experimenting with blockchain technology for central bank settlements, signaling a concrete step toward integrating blockchain into core financial infrastructure.

In a Tuesday speech at the FIN/SUM conference in Tokyo, BOJ Governor Kazuo Ueda outlined how central banks must adapt to what he described as a “new financial ecosystem,” where tokenization, programmability, and blockchain-based settlement could reshape payments and securities markets.

While noting that the BOJ remains cautious, Ueda confirmed the central bank will experiment with its current account deposits — the reserves financial institutions hold at the BOJ. He added that it is developing a sandbox project to test whether central bank money can operate in blockchain-based systems.

Such experiments, Ueda said, could pave the way for more efficient interbank transfers and securities settlement, particularly if combined with smart contracts that enable faster execution.

“We intend to make further progress while gaining the support of external experts, exploring methods of connection with the existing system as well as examining use cases such as domestic interbank settlement and securities settlement,” said the central bank governor.

Project Agora

The BOJ’s efforts align with broader international initiatives, including Project Agora led by the Bank for International Settlements. The project brings together multiple central banks to explore cross-border wholesale settlement using tokenized central bank money. Japan is among the participating jurisdictions.

Ueda said participants in Project Agora are exploring a framework that would allow central banks — including the Bank of Japan — to issue central bank money as tokenized deposits on the blockchain, potentially embedding smart contract functionality.

“If this project comes to fruition, it may bring innovation in terms of streamlining cross-border payments,” Ueda added.

Retail CBDC

Meanwhile, Ueda said the BOJ is continuing its pilot program for a potential retail central bank digital currency (CBDC). As part of the pilot, the BOJ is testing the core infrastructure of a CBDC system while operating a CBDC Forum that brings together private sector participants to contribute technical expertise and operational insights.

Ueda said the bank plans to reorganize the CBDC forum in its next phase to broaden discussions beyond technical design and examine the future of payments more holistically. However, he did not offer a timeline in his speech.

The central bank governor’s remarks come as the country’s broader crypto framework continues to evolve. In January, Finance Minister Satsuki Katayama voiced support for integrating crypto assets into the traditional financial system, describing stock and commodity exchanges as playing a “crucial” role in expanding public access to crypto and blockchain-based assets.

Separately, in November 2025, the Financial Services Agency finalized plans to reclassify 105 cryptocurrencies, including bitcoin and ether, as financial products under existing regulations, bringing them more firmly under the country’s existing oversight framework.