The Accountant General and TASE Establish a Joint Team to Perform a Proof of Concept for the Issuance of government Bonds on a Blockchain Platform (DLT)
The process will include a pilot issuance of digital government bonds by digital-asset technology leaders, VMware and Fireblocks
TEL AVIV, Israel, Oct. 19, 2022 /PRNewswire/ -- The Accountant General, through the Debt Unit in the Financing Division, and The Tel Aviv Stock Exchange Ltd (TASE: TASE), are examining the application of the issuance of digital government bonds on a Blockchain infrastructure. The two have recently established a joint team to perform a Proof of Concept (PoC) of the clearing of digital bonds of the State of Israel on a new platform for the trading and clearing of digital assets. The new platform is based on innovative technologies - Blockchain (Distributed Ledger Technology - DLT), Smart Contracts and Tokenization.
TASE and the Accountant General's examination is motivated by the developments in the financial markets in recent years, including the use of DLT, tokenizing of different types of assets and the various tests ran by financial institutions and central banks worldwide concerning the issuance of Central Bank Digital Currency (CBDC). This is based on the realization that those developments will effect a material and advanced change in the financial markets, in general, and in the trading and clearing arenas, in particular.
Government debt raising and management processes, which are complex by nature, are generally of a large scale, require synchronization between several systems, incorporate multiple parties (local and international) and are subject to strict regulatory monitoring and guidance. Project "Eden" kicks off the journey into this new world, allowing a first and important foothold that will serve as the foundation for the upgrading of other traditional mechanisms down the road. The implementation of the advanced technologies will reduce costs, shorten the duration of issuance and clearing of government bonds, improve transparency, streamline processes and mitigate risks.
The PoC will include the digitalization of a new series of bonds and its issuance to the system participants. As part of the issuance, the leading banks, both international and local (primary dealers), will participate in a "live test", during which they will be connected to a dedicated Blockchain system that will be developed by TASE and the select technology vendors. The acquired units of the new series will be issued into the e-wallets of the pilot participants. The issuance consideration, in digital currency, will be transferred from the e-wallets of the participants to a dedicated e-wallet by the State of Israel.
Ittai Ben-Zeev, CEO of TASE, said: "The financial markets are undergoing drastic transformations in recent years, with the introduction of revolutionary technologies that affect the manner in which customers worldwide operate and invest. As a global technology leader, we hope to see Israel spearhead financial technology as well, being the first to implement cutting-edge technologies and upgrade the capital market, making it more accessible to the public. I would like to thank the Accountant General and all those partaking in this important project, which is the first and important step to creating a more advanced and accessible capital market."
The Accountant General, Yali Rothenberg, said: "The move that we are currently leading, jointly with TASE, for the issuance of state bonds on a Blockchain platform, places Israel at the forefront of technology and allows us to examine, in a secure and controlled manner, new possibilities for the issuance and management of the government debt. I believe that Blockchain-based technologies are here to stay, and overtime will permeate the core of the financial markets, thoroughly and deeply altering them. It is our duty to constantly examine new technologies and methodologies. Just recently, we have launched a new platform for State payments to small businesses. I would like to thank TASE and the other partners - the primary dealers and the technology companies - for their cooperation in this innovative and important project."
Senior Deputy Accountant General and Head of the Financing Division, Gil Cohen, said: "In the Ministry of Finance, we closely monitor the prominent technological developments that affect the capital markets worldwide, including Blockchain. Six months ago, we conducted a hackathon to examine the applications of Blockchain in the issuance of government debt, which hosted Israel's top startups in this field. We are now taking the next big step of examining the issuance of state bonds on Blockchain, a step that has the potential to create a more advanced and accessible capital market that will streamline the management of the government debt. I would like to thank TASE and the other partners in this groundbreaking and important project."
Michael Shaulov, CEO & Cofounder of Fireblocks, said: "Digitizing the financial system takes the collaborative efforts of both the public and private sectors. Fireblocks is honored to work with the Israel Ministry of Finance, the Tel Aviv Stock Exchange, and VMware to develop the first digital state bond in Israel. With this PoC, Fireblocks was able to build a foundational technology layer for the issuance of digital bonds that is secure, highly-scalable, and may be deployed by TASE for any other innovative digital asset use cases in the future as they strive to increase capital markets accessibility for all."
Kit Colbert, CTO of VMware, said: "We are proud to have The Tel Aviv Stock Exchange, Israel Ministry of Finance and Fireblocks co-developing a globally recognized digital asset exchange to trade bonds and other tokenized assets in the future. Tel Aviv Stock Exchange's initiative is a testament to the vision we set as a company: To bring enterprise-grade blockchain technology to the largest companies and brands on the planet."
The PoC will be performed by digital-asset technology leaders, VMware and Fireblocks.
Fireblocks is an enterprise-grade platform delivering a secure infrastructure for moving, storing, and issuing digital assets. Fireblocks enables exchanges, lending desks, custodians, banks, trading desks, and hedge funds to securely scale digital asset operations through the Fireblocks Network and MPC-based Wallet Infrastructure. Fireblocks serves over 1,500 financial institutions, has secured the transfer of over $3 trillion in digital assets and has a unique insurance policy that covers assets in storage & transit. Some of the biggest trading desks have switched to Fireblocks because it's the only solution that CISOs and Ops Teams both love. For more information, please visit www.fireblocks.com.
VMware is a leading provider of multi-cloud services for all apps, enabling digital innovation with enterprise control. To expand the digital foundation, VMware provides a Blockchain platform for the deployment of business-critical decentralized applications in a multiparty environment. VMware's Blockchain product supports the Ethereum model, enabling the drafting of smart contracts in languages such as Solidity. The product is currently used by Broadridge as well as by the Australian Securities Exchange (ASX), which is currently in the testing phase. In addition, VMware's Blockchain was involved in the Bank of Israel's trial issuance of a digital shekel, a trial that was a success and was published in the Bank of Israel's report in late May.
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SOURCE Tel Aviv Stock Exchange Ltd