Japan's Ministry of Finance Proposes Three Types of Government Bond On-Chain Solutions

Odaily reports that Japan's Ministry of Finance today held the first meeting of its "Government Bond On-Chain Research Group" and released explanatory materials, tentatively categorizing government bond on-chaining into three types:

Type 1 involves circulating investment trust government bond fund (MMF) beneficiary rights on the blockchain; Type 2 involves putting transfer ledgers on-chain under the current transfer settlement system, including three forms: a single account management institution, multi-institution collaboration, and integration with the Bank of Japan's ledger; Type 3 involves issuing new forms of government bonds on a blockchain outside the current system.

Japan's Ministry of Finance believes that government bond on-chaining can improve collateral and liquidity management efficiency and expand the investor base, particularly benefiting overseas investors, but there are also challenges such as market fragmentation, transmission of severe price fluctuations, and system renovation costs. All three types are currently tentative classifications, and the Ministry of Finance plans to compile a report by January 2027.