🧠 Food for thought

Implications, context, and why it matters.

Japan’s biggest banks are already building securities-settlement use cases

• The Bank of Japan is checking whether central bank money, its current account deposits, can run on blockchain-based systems. It is also setting up a sandbox for that work. At the same time, Japan’s five largest financial groups have joined a separate pilot backed by Japan’s Financial Services Agency (FSA) to test blockchain-based settlement for traditional book-entry securities 1.
• Nomura Securities, Daiwa Securities, Mizuho Financial Group, Mitsubishi UFJ Financial Group (MUFG), and Sumitomo Mitsui Financial Group (SMFG) are testing settlement for assets such as Japanese government bonds and listed stocks on blockchain rails 1.
• The pilot is aiming for a “native” approach where the legal transfer of a security stays in sync with the blockchain record, rather than relying on trust wrappers that sit on top of existing securities 1.

This is a global effort to build a public anchor alongside private digital money

• The BOJ’s work fits into wider programs led by central banks and the Bank for International Settlements (BIS) to upgrade cross-border payments and settlement as stablecoins gain ground in international flows 2, 3.
• Cross-border cryptographic-asset transactions hit an estimated $2.5 trillion in 2024. Stablecoins have served as an “informal foreign currency alternative” in some emerging markets 2.
• Project Agora brings public and private players together to explore tokenisation for wholesale cross-border payments. It uses central bank money, tokenised central bank reserves, plus tokenised commercial bank deposits. It also addresses concerns that stablecoins miss system-level traits expected of sound money 3, 4.
• The BIS has outlined a “unified ledger” that can host tokenised central bank reserves, commercial bank money, and tokenised financial assets on one programmable platform. That setup supports atomic or programmable transactions where payment and asset transfer occur together, while keeping the two-tier monetary system in place 4, 3.