The Bank of Japan will test blockchain-based settlement using central bank reserves. The move signals that one of the world’s largest central banks is actively evaluating blockchain for core financial plumbing rather than peripheral experimentation.
Governor Kazuo Ueda confirmed the initiative during a speech Tuesday at the FIN/SUM conference in Tokyo. He said the Bank of Japan (BOJ) will experiment with its current account deposits, the reserves commercial banks hold at the central bank, through a sandbox designed to assess blockchain-based connectivity with existing systems.
Can Tokenized Central Bank Money Streamline Settlement?
The tests align Japan with a growing cohort of central banks exploring tokenized wholesale settlement. Through Project Agora, led by the Bank for International Settlements, multiple jurisdictions are studying cross-border transfers using tokenized central bank money with embedded smart contract functionality. Japan is a participant in the initiative.
Ueda said the BOJ intends to advance the experiments with input from external experts while studying domestic interbank and securities settlement use cases.
“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,” he said.
But the wholesale focus does not exclude retail ambitions. The BOJ continues its pilot program for a potential retail central bank digital currency, testing core infrastructure while convening a CBDC Forum of private-sector participants. Ueda said the forum will be reorganized in its next phase to broaden discussions beyond technical design, though he did not provide a timeline.
The experiments unfold as Japan tightens its broader crypto oversight framework. In November 2025, the Financial Services Agency finalized plans to reclassify 105 cryptocurrencies, including bitcoin and ether, as financial products under existing rules. Whether the BOJ’s sandbox advances toward live issuance will depend on technical results and cross-border coordination under Project Agora, the next catalyst to watch.
