A large-scale verification project for interbank settlement using tokenized deposits, or TD, began on Aug. 20 in Japan with support from the Financial Services Agency’s FinTech Proof-of-Concept Hub. The trial brings together 43 companies, including DCP, GMO Aozora Net Bank and Abeam Consulting. Thirteen banks, including Resona Bank and Bank of Yokohama, are participating directly, while 21 more have joined as observers. The project will test whether blockchain can support 24/7/365 real-time gross settlement, or RTGS, for bank-to-bank payments. It will compare two settlement structures, the TD lead bank model and the TD-SC linked model, and assess them in terms of legality, usefulness and feasibility. The verification will also examine whether the framework could open new business opportunities and reduce settlement costs and risks. The effort comes as the Bank of Japan has signaled that it is considering tokenized central bank money, while Japan’s Cabinet Office has stated that it is moving ahead with on-chain finance policies.
Japan has started a large-scale verification project for interbank settlement using tokenized deposits, or TD, with support from the Financial Services Agency’s FinTech Proof-of-Concept Hub.
According to Coinpost, the project began on Aug. 20 and includes 43 companies, among them DCP, GMO Aozora Net Bank and Abeam Consulting. Thirteen banks, including Resona Bank and Bank of Yokohama, are taking part as participating banks, while another 21 banks have joined as observers.
Two settlement models under review
The trial is designed to test whether blockchain technology can enable 24/7/365 real-time gross settlement, or RTGS, for interbank payments. It will compare two approaches: the TD lead bank model and the TD-SC linked model.
The participants will assess those structures from three angles: legality, usefulness and feasibility. The project will also examine whether the system could create new business opportunities and whether it can lower settlement costs and risks.
Policy backdrop
The verification comes as the Bank of Japan has indicated that it is considering tokenized central bank money. Japan’s Cabinet Office has also made clear that it is pushing forward with on-chain finance policy.
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