Japan's ruling Liberal Democratic Party has formally approved a policy proposal to build a next-generation financial system using AI and blockchain technology, The Block reported on Monday.

The proposal, titled the "Next-Generation AI and On-chain Finance Initiative", was drafted by an LDP project team led by lawmaker Seiji Kihara (기하라 세이지), the report said. It was submitted to the party earlier this month, and the LDP's Policy Research Council formally approved it on Tuesday.

The proposal sets developing automated financial infrastructure as a top priority to support 24-hour autonomous commerce through blockchain networks. It also says autonomous commerce, in which AI selects goods and services on behalf of people, and the anti-tampering, verifiable and programmable features provided by blockchain have high compatibility.

It also includes measures to support tokenised deposits and yen-denominated stablecoins.

On tokenised deposits, it mentions that tokenising Bank of Japan current account deposits is essential. On stablecoins, it also notes that ensuring legal clarity and mitigating system risk are important.

The proposal also calls for a framework to strengthen cooperation with other Asian countries in AI and blockchain. As part of that, it urges the Financial Services Agency to establish a five-year roadmap to promote joint public-private investment.

With the formal approval, the LDP will begin work with related stakeholders to turn the proposal into government policy, The Block reported.