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    3. Mitsubishi Challenges 'Real-Time Settlement of Japanese Government Bonds' Based on Blockchain

    Mitsubishi Challenges 'Real-Time Settlement of Japanese Government Bonds' Based on Blockchain

    By: rootdata|2026/08/13 16:47:00
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    [Mexico City = Shim Young-jae, Correspondent] Mitsubishi UFJ Financial Group (MUFG), one of Japan's largest financial groups, has embarked on a demonstration to settle repurchase agreement (RP) transactions backed by Japanese government bonds (JGB) in real-time on the blockchain. The key aspect of this trial is not to convert the bonds themselves into tokens but to synchronize the changes in the account ledgers of financial institutions with the blockchain while maintaining the existing book-based bond system.

    According to Bitcoin.com, MUFG is conducting a demonstration project to verify whether it is possible to settle Japanese government bond repo transactions in real-time on the blockchain network as of the 13th (local time).

    This project involves Digital Asset, which developed the Canton Network for institutional finance, and Progmat. Mitsubishi UFJ Morgan Stanley Securities, Mitsubishi UFJ Trust and Banking Corporation, and MUFG Bank are also participating.

    A repo is a short-term funding transaction in which one party sells securities, such as Japanese government bonds, with an agreement to repurchase them at a later date. This method is used by banks, securities firms, and large institutional investors to raise and manage funds.

    Bitcoin.com explains that Japanese government bonds are widely used as collateral in the repo market due to their high liquidity and backing by the Japanese government.

    In the existing financial market, time is needed to complete transactions, and various separate systems must update their records. During this process, financial institutions may need to secure additional cash or collateral until the settlement is completed.

    Not Tokenization of Bonds but 'Ledger Synchronization'

    The core of this demonstration is that it does not convert Japanese government bonds into blockchain tokens.

    According to Bitcoin.com, MUFG does not replace the legal form of Japanese government bonds with tokens issued on the blockchain. The bonds will maintain their current book-entry bond form under Japanese law.

    Instead, it synchronizes the changes in the account ledgers of institutions managing the bonds using blockchain technology.

    The settlement will apply the Delivery versus Payment (DvP) method, where the delivery of securities and payment of funds occur simultaneously. Digital money, such as tokenized bank deposits or stablecoins, has been proposed for fund settlement.

    This aims to test whether it is possible to connect the trading and settlement processes to blockchain infrastructure while maintaining the legal structure of existing government bonds.

    The Canton Network is designed for institutional finance. According to Bitcoin.com, transaction information can only be shared with parties that need to verify it.

    Secured Finance AG, based in Switzerland, provides a lending protocol for this project. It is an automated system designed to handle the entire process of repo transactions through smart contracts.

    Seeking Efficiency in Collateral and Funds through Real-Time Settlement

    MUFG expects to improve the efficiency of funds and collateral utilization through faster settlement speeds.

    According to Bitcoin.com, banks and securities firms can manage funds and collateral more efficiently by shortening settlement times. It can also support intraday repo transactions that open and close positions within the same trading day.

    MUFG explained that it aims to automate operational tasks and expand the available settlement time slots through this demonstration.

    As settlements approach real-time, there is also a possibility of reducing the amount of capital that financial institutions need to secure separately to prepare for settlement delays in the long term.

    This demonstration is part of the Financial Services Agency's (FSA) 'Payment Innovation Project.' According to Bitcoin.com, the FSA selected related demonstration projects last February.

    MUFG stated that it plans to collaborate with regulatory authorities and financial institutions both domestically and internationally during the project's progress.

    Expanding the Scope of On-Chain Japanese Financial Markets

    This project is an extension of the digital financial infrastructure being developed in Japan.

    According to Bitcoin.com, MUFG has previously pursued projects related to security tokens, tokenized financial assets, and digital money. It has also planned to promote stablecoin transactions with other major banks during the 2026 fiscal year.

    However, it is not yet confirmed that this demonstration will lead to the introduction of actual commercial services.

    Bitcoin.com explains that legal coordination, connection with existing financial market systems, and the participation of various financial institutions will be factors determining whether commercialization occurs after the demonstration.

    In particular, how digital money will be used in actual transaction settlements remains an important challenge. The results of the demonstration, regulatory discussions, and methods of linking with existing market infrastructure will also be subjects for further verification.

    The feature of this project is that it integrates blockchain into the settlement infrastructure without directly tokenizing Japanese government bonds. It implements DvP settlement using digital money while maintaining the legal form of existing bonds and synchronizing account ledgers.

    If the demonstration is successful, it could serve as a foundation for reducing transaction processing times in the Japanese government bond repo market and enhancing the efficiency of collateral and fund utilization. However, there are still challenges to be addressed before actual implementation, including legal issues, existing market systems, and the participation of financial institutions.

    -- Price

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