TOKYO, June 10 (Reuters) - Japan's three largest banks said on Wednesday they will jointly issue ‌stablecoins during the current fiscal year ending ‌in March 2027, a sign of growing momentum for digital payments ​in a country where cash and credit cards remain popular.

The banking arms of Japan's three largest financial groups - Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group ‌and Mizuho Financial ⁠Group - will set up a council to examine operational frameworks and prepare for the ⁠issuance, they said in a statement.

Japan's Financial Services Agency has been supporting the experimental stage of the ​project as ​part of the country's ​efforts to use blockchain ‌technology to enhance payment systems.

Stablecoins have been strongly backed by U.S. President Donald Trump and interest has been growing globally, but some policymakers have expressed concern that they could facilitate the flow of funds ‌outside regulated banking systems.

Japanese startup ​JPYC began issuing stablecoins pegged ​to the yen ​in October last year in a ‌sign of small but steady ​change in a ​country where cash and credit cards remain dominant means of payment.

In a proposal this month, ​a ruling party ‌panel also called for promoting usage of ​yen-based stablecoins for settlement in Asia.

(Reporting by Leika ​KiharaEditing by Shri Navaratnam)