Israel will issue government bonds on a blockchain
The Israeli government is testing the clearing of digital bonds of the State of Israel on a blockchain platform. The accountant, through the debt unit of the financing division, and the Tel Aviv Stock Exchange (TASE), recently established a joint team to perform a Proof of Concept (PoC) together with VMware and Fireblocks.
Public debt underwriting and management processes, which are complex in nature, are generally large-scale, require synchronization between multiple systems, involve multiple parties (local and international), and are subject to strict regulatory oversight and guidance. The new project, which has been named “Eden”, aims to reduce costs, shorten the duration of issuing and clearing government bonds, improve transparency, streamline processes and reduce risk.
The PoC will include digitization of a new series of bonds and issuance to system participants. As part of the issuance, the leading international and local (primary merchant) banks will participate in a “live test”, where they will be connected to a dedicated blockchain system that will be developed by TASE and the selected technology providers. The acquired units of the new series will be issued in the e-wallets of the pilot participants. The issuance fee, in digital currency, will be transferred from the e-wallets of the participants to a dedicated e-wallet of the State of Israel.
“Financial markets are undergoing drastic transformations in recent years, with the introduction of revolutionary technologies affecting the way clients around the world operate and invest,” said Ittai Ben-Zeev, CEO of TASE. “As a global technology leader, we hope to see Israel take the lead in fintech as well, being the first to implement cutting-edge technologies and upgrade the capital market, making it more accessible to the public.”
The Accountant General, Yali Rothenberg, said: “The initiative that we are currently leading together with TASE, for the issuance of government bonds on a blockchain platform, places Israel at the forefront of technology and allows us to explore, in a safe and secure. controlled manner, new opportunities for issuance and management of the sovereign debt. I believe that blockchain-based technologies are here to stay, and over time will permeate the core of financial markets, changing them thoroughly and deeply. It is our duty to continuously investigate new technologies and methods.”
Michael Shaulov, CEO and co-founder of Fireblocks, said: “Digitizing the financial system requires collaboration from both the public and private sectors. Fireblocks is honored to partner with the Israeli Ministry of Finance, the Tel Aviv Stock Exchange and VMware to develop the first digital the government bond in Israel.”
