By Takehiro Kawashiri
Yomiuri Shimbun Staff Writer
The Japanese government has decided to establish a legal framework for enabling local governments to issue bonds in the form of digital securities, according to sources.
The aim of the move is to broaden the scope of buyers and diversify the funding sources of local governments.
The Cabinet plans to approve a bill to revise related laws, such as the Local Finance Law, soon. The bill will then be submitted to the current Diet session. The government aims to implement the measure from April 2027.
Digital securities are designed to be difficult to tamper with or falsify, and their value can be divided into smaller units more easily than traditional securitized products.
This allows investors who do not have a large amount of capital to make investments from smaller amounts. As a result, digital securities are now spreading rapidly in fields such as corporate bonds and real estate.
If local governments become able to issue municipal bonds as digital securities, it will significantly reduce the burden of paper-based management.
Digital securities use blockchain technology, which links transaction data across a distributed network in a chain-like structure, enabling local governments to directly access investor information and transaction histories without referring to financial institutions.
It will help local governments gain more opportunities to connect with investors, which is expected to foster greater understanding of local policies. It may also incentivize investors to continue purchasing local bonds.
In December, the central government decided to respond to requests from local governments to issue bonds in the form of digital securities.
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This article is from The Yomiuri Shimbun. Neither Dow Jones Newswires, MarketWatch, Barron's nor The Wall Street Journal were involved in the creation of this content.
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March 24, 2026 01:11 ET (05:11 GMT)
Copyright (c) 2026 The Yomiuri Shimbun
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