Mitsubishi UFJ Financial Group (MUFG) said it will use blockchain technology to improve settlement speeds for Japanese government bond trades, with an on-chain proof-of-concept planned on the enterprise blockchain network Canton.
According to MUFG, settlement in the traditional financial system usually takes one to three business days. The bank said the goal is to move that process toward real-time delivery and settlement on a 24/7, year-round basis.
Targeting faster bond settlement
MUFG said the test is aimed at speeding up transactions tied to Japanese government bonds through an always-on on-chain settlement mechanism. The Tokyo-headquartered financial group said that structure could improve operational flow and capital efficiency in repo transactions, which are short-term funding deals conducted through the sale and repurchase of securities.
Looking to existing blockchain use cases abroad
MUFG said major financial institutions in the U.S. and Europe have already taken similar proof-of-concept work into live use. It cited JPMorgan Chase as an example, saying the bank launched the Kinexys blockchain network in 2020 and brought intraday U.S. Treasury repo transactions on-chain. MUFG said the network has operated steadily for several years, helping demonstrate the reliability of the technology.
MUFG sees growing demand to bring JGBs on-chain
MUFG said, 「With extremely high credit ratings and strong liquidity, Japanese government bonds have long been the most preferred collateral for domestic and overseas institutional investors in repo transactions. Now, calls from the market to bring government bond assets on-chain are growing explosively.」
Broader Web3 plans are also moving ahead
Beyond settlement infrastructure between institutions, MUFG said its recent Web3 strategy is also accelerating. The group has already joined talks with two other major Japanese banks — Sumitomo Mitsui Financial Group (SMBC) and Mizuho Financial Group (Mizuho) — on the possibility of issuing and listing a cross-border stablecoin by March 2027.
The article was first published by Blockcast.