US$1.6B US in government savings bonds were sy sold within two weeks of launch
Bank of Thailand (BOT), the central bank, has launched one of the world’s first blockchain-based platform for government savings bonds issuing a total of $1.6B USD within two weeks.
Leveraging blockchain technology on the secured IBM Cloud, the platform allows investors to benefit from speedy bond issuance, reducing a process that previously took 15 days to two days.
The efficiency provided by blockchain also reduces operational complexity and the overall cost of issuing bonds.
According to The Thai Bond Market Association, the outstanding Thai bond market stood at US$421B as of December 2019. Government bonds dominate the Thai market, with outstanding value of US$157B in 2019 1, accounting for 37 per cent of the total outstanding Thai bond market.
In the past, the sale of government savings bonds was a complex, multiparty, time-consuming process that relied on a non-real-time system, with duplicated validation steps and manual reconciliation prone to data errors.
As blockchain technology streamlines the processes of bond issuance for issuers, underwriters, registrars, investors and key ecosystem participants, the government savings bond platform now becomes an immutable, real-time single source of truth for network participants, which minimizes the redundant validation and reduces the costs of reconciliation. In addition, Thai investors can now purchase bonds up to the maximum value of their individual allocated quota from a single bank.
The effort to develop a secure and efficient government bond infrastructure involved collaboration among eight institutions including BOT, Public Debt Management Office, Thailand Securities Depository Co., Ltd, Thai Bond Market Association and selling-agent banks, including Bangkok Bank, Krungthai Bank, Kasikorn Bank, and Siam Commercial Bank, with IBM Blockchain as technology and cloud platform partner.
The benefits and business value of using blockchain technology for government bond distribution is shared across stakeholders, and include faster bond issuance for investors, decreased workloads and processing time for issuers, underwriters and registrars, as well as greater transparency and reduced operating costs across the entire value chain.
Thailand is an active adopter of blockchain technology, with a dynamic ecosystem extending to both public and private spheres.
In 2019, the electronic letter of guarantee (eLG) platform and network participated in by 22 Thai banks and 15 companies successfully went live and currently handles approximately US$300M in guarantee letters.
Thai Customs Department also became the second government agency in southeast Asia to use TradeLens, a blockchain-based global trade digitization platform that improves the speed, accuracy and security of local and international shipping activities. More pilots and applications of blockchain are also being rolled out to bring transparency and efficiency to finance, insurance, government, and other sectors.
