Mitsubishi UFJ Financial Group (MUFG) said Thursday that four entities inside the group will work on a new proof-of-concept project to move Japanese government bond repo transactions onto blockchain infrastructure, targeting 24/7 real-time settlement.
According to the MUFG announcement cited in the source article, the participants are MUFG, Mitsubishi UFJ Morgan Stanley Securities, Mitsubishi UFJ Trust and Banking, and MUFG Bank. The pilot will be conducted with Digital Asset and its subsidiary Progmat, with Canton Network serving as the base blockchain network.
The pilot is aimed at three operational issues
Japanese government bond repo is described in the article as one of the most basic funding tools in global finance, allowing banks to borrow short-term against government bond collateral. The report says the traditional process relies on several intermediaries, manual documentation, and T+1 settlement, leaving both efficiency and capital use constrained.
MUFG’s PoC is intended to address three core items. One is operational automation, with the trade lifecycle from order placement to collateral management and settlement handled by on-chain smart contracts. Another is 24/7 real-time settlement, removing limits tied to banking hours and weekends. The third is better funding and capital efficiency, with collateral tracked and reused in real time so less capital sits idle.
Canton Network is the underlying blockchain
The article describes Canton Network as an enterprise blockchain network developed by large financial institutions including HSBC, JPMorgan, Franklin Templeton, and DTCC for traditional finance use cases. It says the network supports private transactions, cross-institution data sharing, and settlement for tokenized assets.
The report also notes that HSBC’s tokenized deposits went live on Canton Network in April, followed by JPMorgan, DTCC, and Franklin Templeton. MUFG is now placing Japanese government bond repo activity on the same network.
Part of Japan’s payment innovation program
The pilot is also presented as part of the payment innovation program announced by Japan’s Financial Services Agency in February. Under that framework, according to the article, the regulator opened a sandbox for fintech firms to test blockchain, stablecoins, tokenization, and on-chain settlement.
The source article argues that the program is notable not simply for welcoming crypto, but for creating a policy structure under which banks can run live PoCs tied to actual business functions and then standardize the results. It adds that MUFG’s repo pilot is only one step, with possible later coverage extending to foreign exchange settlement, money market funds, and cross-border trade finance.
MUFG’s blockchain timeline in the article
The report outlines a broader technology path for MUFG:
- June 2023: MUFG announced the Progmat Coin stablecoin issuance platform, allowing banks to issue yen stablecoins across multiple public chains.
- February 2022: MUFG ended the GO-Net Japan blockchain payments project and shifted its strategy toward stablecoins.
- August 2026: MUFG began the Japanese government bond repo on-chain PoC using Canton Network.
The article summarizes that path as a move away from general-purpose payments infrastructure, toward stablecoin infrastructure, and then into putting a core business line — Japanese government bond repo — on-chain.
Market scale cited in the report
The article says the global repo market exceeds $30 trillion, with Japanese government bond repo accounting for roughly $5 trillion to $8 trillion of that total.
It lists three potential effects if settlement and collateral reuse can happen on-chain in real time:
- Higher liquidity, because collateral would no longer be tied up in T+1 settlement and the same government bond could circulate multiple times in a single day.
- Better capital efficiency, because banks would not need to hold as much buffer funding.
- Greater transparency, because on-chain records could be audited in real time, cutting the risk of collateral going missing in a 2008-style event.
The report closes by saying Japanese government bonds are one of the key anchors of global liquidity. If on-chain repo works as intended, moves in Japanese government bond yields could be transmitted into markets more quickly, with faster spillover into Asian asset prices.