Japan Post Bank Plans Digital Currency Pivot Amid Bond Market Crisis

Japan’s Nikkei 225 index touched a three-week low earlier today, as the bond market faces a major crisis-like situation with weak institutional demand. To pivot from this scenario, Japan Post Bank is planning to issue a DCJPY digital currency during FY2026. Amid weak demand, the 10-year Japan bond yield has surged to over 1.625%, while the 30-year yield has surged above 3.19%.

Japan Post Bank Taps 120 Million Accounts With Digital Currency

Japan Post Bank plans to roll out a digital currency in fiscal 2026, enabling depositors to quickly trade blockchain-based financial products. By integrating its 120 million accounts with advanced technology, the bank aims to make savings instantly accessible for digital asset transactions. This comes as Japan’s FSA has been pushing for strong crypto reform.

As a result, the bank is planning to adopt DCJPY, a digital currency developed by Tokyo-based DeCurret DCP. Each DCJPY token will be pegged to 1 yen, and users can seamlessly link their savings accounts with a DCJPY account for instant conversion via an app.

Depositors will be able to use DCJPY to buy security tokens, such as blockchain-based assets and bonds, offering potential returns in the range of 3% to 5%. An April report by Boston Consulting Group and Ripple projects that the tokenized real-world asset market will surge from $600 billion in 2025 to $18.9 trillion by 2033, reported Nikkei Asia.

Additionally, the plan includes enabling local governments to distribute subsidies and grants via DCJPY, allowing automatic deposits and streamlining administrative processes. DeCurret DCP is currently in talks with local authorities, while Japan Post Bank has stated it will consider implementing the feature based on demand from these governments.

The integration with tokenized assets such as security tokens and NFTs will enable faster settlements, reduced friction, and increased liquidity. This could potentially drive greater participation from both institutional and retail investors.

Japan’s Bond Market Crisis Worsens

Institutional demand for Japanese government bonds (JGBs) has slowed down significantly, with major buyers scaling back on super-long maturities in 2025. Data from the first seven months of the year reveal that insurers sold more super-long JGBs, covering maturities of 20, 30, and 40 years. For the first time on record, these investors have become net sellers.

On the other hand, Trust banks, which often act as proxies for pension funds, purchased a net 1.47 trillion JPY in super-long JGBs during the same period, roughly 34% below their five-year average. For comparison, these institutions bought 7.39 trillion JPY worth of such bonds over the entirety of 2024.

The reduced appetite for long-term JGBs has pushed Japan’s 30-year bond yield to 3.19%, hovering near a record high. Amid the stress in the bond market, local companies like Metaplanet have continued with their Bitcoin purchases. This comes despite BTC price being under selling pressure recently.