Israel is launching a pilot program for issuing government bonds on a blockchain platform. The project, named "Eden," is coordinated jointly by the Office of the Accountant General in the Ministry of Finance and the Tel Aviv Stock Exchange (TASE). Bonds will be traded and cleared through a permissioned private DLT platform co-developed by Fireblocks, a digital asset custody, transfer, and settlement platform, and VMware, a cloud computing and virtualization company, both from the US.
Led by TASE, the initiative aims to reduce government debt issuance and management costs, mitigate risks, increase transparency, and speed up the whole process. Currently, the project is at the stage of Proof of Concept, during which a new series of digitized bonds will be issued to the participating banks, which – in return – will transfer money to the government's e-wallet. The funds are to be sent in digital currency, unspecified in the press release.
"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", said Ittai Ben-Zeev, CEO of TASE.
Blockchain-based bonds have already been tested by several other governments, with Australia pioneering the scheme. The European Investment Bank and financial institutions from a few other countries, such as El Salvador, the Philippines, Thailand, and South Korea, followed suit.