Japan wants stock and bond settlement to happen instantly, on a blockchain
Japan is studying whether to move the settlement of stocks and government bonds onto blockchain infrastructure capable of running in real time around the clock, according to Nikkei, in a project involving the Financial Services Agency, the Ministry of Finance, the Bank of Japan, and the country’s three largest banks.
It is the sort of institutional endorsement tokenisation advocates have been arguing for since long before JPMorgan started filing tokenised funds on Ethereum.
The current cycles are what the plan is aimed at. Japanese equities settle in two business days and government bonds in one, which is the global norm and also a window in which counterparty risk sits on someone’s books.
The mechanism under consideration is more interesting than the headline. Portions of the balances banks hold at the Bank of Japan would be converted into digital tokens on a blockchain network, making this an interbank central bank digital...
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