Bank of Japan to experiment with blockchain settlement for reserves, Governor Ueda says

[TOKYO] The Bank of Japan will conduct experiments for using blockchain technology to settle deposits that financial institutions park with the central bank, Governor Kazuo Ueda said on Tuesday.

The experiments will be part of a “sandbox project” under way at the BOJ to enable the use of central bank money for a range of settlements using blockchain, Ueda said in a speech titled “the New Financial Ecosystem and the Role of Central Banks”.

“We intend to make further progress, with the support of external experts, exploring methods of connection with existing systems as well as examining use cases such as domestic interbank settlement and securities settlement,” Ueda said.

The BOJ manages intrabank settlement, liquidity and monetary policy through commercial banks’ reserve accounts held at the central bank.

Introducing blockchain technology to settle such reserves would allow scope for instant settlement 24 hours a day and reduce gridlock risk in stress events, analysts have said. REUTERS