Japan Develops Distributed Ledger Infrastructure for Settlement of Stocks and Bonds

Japan is preparing a financial infrastructure based on distributed ledger technology that will enable almost immediate settlement of transactions involving government stocks and bonds, reducing the settlement time from days to seconds. The Financial Services Agency of Japan, the Ministry of Finance, the Bank of Japan, and financial entities will study the initiative. The working group will begin its activities in the summer of 2026 and will present an initial development plan in early 2027. The project will define the distributed ledger technology to be used, the distribution of responsibilities, and the roadmap for its implementation. If approved, the first operations could begin in the coming years, with broader adoption expected in the early 2030s. Currently, stock transactions are settled two days after execution, while government bonds are settled the next day. The new infrastructure will allow for a real-time settlement scheme, reducing exposure between parties. It will also facilitate Delivery versus Payment (DvP) transactions, allowing investors to reinvest the funds obtained more quickly. This initiative adds to other experiments in Japan with tokenized assets and distributed ledger technology in financial markets, including tests with tokenized JGBs. The project could extend to international remittances, broadening its scope beyond equity markets. It is not indicated that Japan will directly employ the Bitcoin network, but rather focus on an institutional infrastructure tailored to its needs.