Japan to Tokenize Government Bonds for 24/7 Trading
Japan will tokenize government bonds later this year for round-the-clock trading and near-instant settlement. Progmat will lead a new bank-and-broker entity to link JGBs to the $4 trillion daily repo market.
The Japanese government plans to issue and trade government bonds as digital tokens later this year, enabling round-the-clock trading and near-instant settlement. Progmat will lead a new industry entity formed by major banks and securities firms to connect Japanese government bonds, or JGBs, to the $4 trillion-a-day global repurchase agreement market.
The government expects the platform to be in operation before year-end. Progmat will serve as secretariat for the organization that will establish and run the tokenization program. Participants will include Japan’s largest banking groups and major securities firms such as Tokio Marine Holdings, Daiwa Securities and SBI Securities.
Under the program, JGBs would be issued and transferred as digital tokens on an on-chain system. Trades could execute at any hour and settlement would move from the current next-business-day timetable to near-instant finality on the ledger. Tokenized bonds are intended for use in repurchase agreements, where securities serve as collateral for short-term loans.
The global repo market handles about $4 trillion in transactions daily, with Japan accounting for roughly 10% of that volume. Organizers expect on-chain JGBs to enable faster collateral transfers and continuous trading between counterparties, improving how cash and securities are deployed in repo activity.
Japan’s digital securities market remains small, with about $2.3 billion issued to date, mostly in real estate-related assets. Supporters of the tokenization program expect broader adoption to draw significant institutional capital into digital securities by simplifying settlement and trading operations for large firms.
The initiative follows similar industry efforts abroad to place government debt on distributed ledgers. The platform will focus initially on repo use cases and settlement efficiency; further features and wider market participation are to be developed after launch. Officials and industry participants plan to publish technical and operational details as testing proceeds ahead of full operation.
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