Japan’s ruling Liberal Democratic Party has approved a new proposal focused on combining AI and blockchain technology with the country’s financial system. The plan supports tokenized deposits, yen-backed stablecoins, and 24/7 digital payment systems.
The proposal, called “Next-generation AI & Onchain Finance Concept,” was prepared by an LDP project team led by Seiji Kihara. Kihara said the proposal has completed the party approval process and will now move toward practical development.
The document was released on May 19 by the LDP’s Policy Research Council and Digital Society Promotion Headquarters. It describes a future financial system where payments, lending, contracts, and logistics can operate automatically around the clock using AI and blockchain technology.
A major part of the proposal focuses on tokenized bank deposits and yen stablecoins. The plan encourages Japanese banks to create tokenized deposit products that can connect payments directly with trade and supply chain systems through smart contracts. Officials also want clearer rules on whether stablecoins can be used for salaries, taxes, and company investments.
The proposal also supports studying tokenized deposits linked to the Bank of Japan, including possible wholesale central bank digital currency use. The central bank has been asked to outline its implementation review process before the end of the year.
The plan is also tied to Japan’s Payment Innovation Project, where major banks including Mitsubishi UFJ Financial Group, Sumitomo Mitsui Banking Corporation, and Mizuho Financial Group are exploring joint yen-backed stablecoin systems. The goal is to begin practical use by next March, especially for international corporate payments.
Japan’s Financial Services Agency has also been tightening reserve requirements for stablecoin issuers as the country expands its blockchain finance framework.
The proposal further calls for creating an “AI and Onchain Finance Asia Policy Dialogue Framework.” The platform would bring together governments and private companies across Asia to discuss rules for real-world asset tokenization, audits, KYC, AML standards, and cross-border blockchain finance.
According to the proposal, Japan believes it already has a strong position for regional financial cooperation, as around 40% to 50% of its trade settlements with Asian countries are conducted in yen.
