Bank of Japan (BoJ) Governor Kazuo Ueda revealed at a Tokyo fintech conference that the central bank is pushing forward a sandbox experiment to allow financial institutions' reserves held at the BoJ to be settled via blockchain technology. This marks one of the clearest endorsements of blockchain infrastructure by a major central bank globally.
Sandbox Experiment: Central Bank Money on the Chain
Ueda said the sandbox will explore using central bank money for various settlement scenarios on blockchain, including interbank settlements and securities settlements. If successful, blockchain settlement could enable 24/7 real-time settlement, reduce settlement gridlock risks during stress events, and significantly boost cross-border payment efficiency. However, Ueda acknowledged challenges remain: performance bottlenecks for high transaction volumes, legal and operational risks of smart contracts, and governance architecture design.
Seven Central Banks Join Forces: Project Agorá
Notably, BoJ is a participant in Project Agorá, led by the Bank for International Settlements (BIS). The project brings together seven central banks—including the Federal Reserve Bank of New York, Bank of England, Banque de France, Bank of Korea, Swiss National Bank, and Banco de México—plus over 40 financial institutions such as Citigroup, HSBC, and SWIFT. They are exploring tokenized cross-border payments on a unified ledger. Project Agorá has moved from design to prototype testing, aiming for faster, more transparent, and lower-cost cross-border settlement using tokenization and smart contracts.
Japan's Crypto Institutional Tailwinds
Japan has been at the forefront of digital asset regulation in recent years. Beyond the central bank's blockchain settlement experiment, private financial institutions are also active—JCB is conducting a digital yen settlement pilot, and Mitsubishi UFJ Bank is developing a yen stablecoin settlement system. Ueda's explicit remarks are seen as the strongest direct endorsement of blockchain infrastructure by the BoJ. When major central banks start putting their own money on the chain for settlement, it signals powerful trust in the technology.