According to BOJ Governor Kazuo Ueda, the Bank of Japan will conduct technical experiments using blockchain technology to settle deposits held at the central bank by financial institutions.
In a speech titled “The New Financial Ecosystem and the Role of Central Banks,” Ueda published on Tuesday he said A sandbox project is underway to test settlement using central bank money “in the form of current account deposits in a blockchain-based system.”
The experiments will explore “methods to connect to the existing system” and explore operate cases including “domestic interbank settlement and securities settlement.”
The project focuses on settlements using deposits in central bank current accounts held by financial institutions at the BOJ. Ueda said the BOJ plans to continue its work with the support of outside experts, treating the work as a controlled technical test rather than a policy implementation.
The goal of Sandbox is interoperability and settlement design
The sandbox will explore interoperability with current systems, including the Bank of Japan’s financial network system, known as BOJ-NET. Ueda said the project’s findings could also be used to improve BOJ-NET.
Ueda added that the integration of artificial intelligence and blockchain could enable improved financial services based on transaction and settlement data recorded in distributed systems.
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Ueda also warned of design risks associated with clever contracts. “However, when the design of smart contracts is inadequate, there is a risk that the stability of financial markets and payment systems is at risk,” he said.
A broader framework for digital assets in Japan
The sandbox comes as Japan refines its regulatory framework for digital assets.
In 2025, the Financial Services Agency conducted a public consultation on the reclassification of certain tokens under the Financial Instruments and Exchange Act, which could subject selected digital assets to securities-style disclosure and market conduct rules.
The government has also included blockchain and tokenization as part of its broader “New Capitalism 2025” growth strategy, positioning digital infrastructure as a pillar of financial modernization.
Japan is also expanding stablecoin integration at the private sector level. On October 27, 2025, JPYC launched the first Japanese yen-backed stablecoin in accordance with the amended Payment Services Act, which recognizes stablecoins as electronic payment instruments.
On March 2, Sony Bank and stablecoin issuer JPYC signed a memorandum of understanding to explore real-time transfers allowing customers to purchase yen-backed stablecoins directly from their bank accounts.
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