Japan Post Bank said Monday that it will issue a digital currency backed by deposits for individual and corporate clients in fiscal 2026, which starts next April.

The digital currency will be linked to depositors' savings accounts and enable instant settlement for purchases of digital securities and other assets, according to the bank.

The bank hopes that local governments will use the digital currency to provide subsidies and other benefits in the future.

The bank will introduce Tokyo-based DeCurret DCP's DCJPY as a yen-backed digital currency, which will be subject to deposit insurance protection.

A DCJPY account will be linked to a depositor's savings account, with 1 DCJPY equivalent to ¥1. Users can convert DCJPY back into yen using an app.

The digital currency utilizes blockchain technology for security. By the end of fiscal 2026, Japan Post Bank plans to allow its customers to use the digital currency to purchase small-lot assets such as real estate and corporate bonds, as well as financial products such as nonfungible tokens (NFTs).

With the new service, settlement times are expected to be shorter than with conventional transactions.

"We will be able to provide a new payment method and develop the market," a Japan Post Bank official said.

Digital currencies can be transferred and settled immediately, reducing settlement costs. In the summer of 2024, GMO Aozora Net Bank became the first Japanese company to issue such a currency for commercial use.