Key facts
- MUFG is testing blockchain-based settlement for Japanese government bond repo transactions.
- The initiative aims to replace the current T+1 settlement cycle with simultaneous payment and securities transfers.
- The proof-of-concept utilizes the Canton Network and infrastructure from Digital Asset and Progmat.
- MUFG is considering tokenized bank deposits and stablecoins as payment instruments.
- The project is expected to be completed by the end of 2026, with potential commercial deployment starting in fiscal 2027.
Japan’s Mitsubishi UFJ Financial Group (MUFG) is conducting a proof of concept to test blockchain-based settlement for Japanese government bond (JGB) repo transactions. This initiative aims to replace the current T+1 settlement cycle with a system capable of simultaneous payment and securities transfers, potentially reducing the need for financial institutions to hold excess funds while awaiting settlement. The JGB repo market had outstanding balances of approximately ¥270 trillion in 2025. The trial involves MUFG Bank, Mitsubishi UFJ Morgan Stanley Securities, and Mitsubishi UFJ Trust and Banking, with settlement instructions provided by Mitsubishi UFJ Morgan Stanley Securities. The project leverages the Canton Network, developed by Digital Asset, which offers privacy-focused blockchain infrastructure for financial institutions. MUFG plans to test atomic delivery versus payment (DvP), ensuring that payment and securities transfer occur concurrently. The JGBs themselves will remain in the existing book-entry system, with the blockchain layer synchronizing settlement records. MUFG is also considering tokenized bank deposits and stablecoins as potential payment instruments for the settlement process. The bank anticipates completing the proof-of-concept by the end of 2026, with commercial deployment potentially beginning as early as fiscal 2027.