The Bank of Thailand Introduces New Platform for Government Bond Issuance via Blockchain

Thailand's Central bank has launched new government scripless bond platform with blockchain technology to enhance bond issuance.

By · Sep 16, 2020 . 7min read

Bank of Thailand Blockchain government bonds
Source : Unsplash

The Bank of Thailand (BOT), the central bank of Thailand, has launched a new platform via blockchain technology to issue government savings bonds. According to the press release, in one week, 50 billion baht that is roughly $1.6 billion in government savings bonds have been traded to investors. However, the central bank announced in March 2018 that it was operating with banks to introduce blockchain-based bond issuance to cut issuance time.

Blockchain Technology to enhance Bond Issuance

Bond issuance is commonly a long process that includes various intermediaries, incurring high costs, and human error. These are some of the current issues in the financial securities market that technological innovations aspire to resolve. This is where bond tokenization comes into the picture, aiming to lower the multiple costs associated with bond issuance.

Blockchain technology can avail the bond market by intensifying data visibility, reducing counterparty risk, and enhancing operational efficiency. Blockchain also facilitates the process of bond issuance with the terms and conditions. The payment process can be automated. Thus, issuers can directly distribute interest payments to the bondholder’s wallet address.

Thailand is one of the countries excited to step forward with their experimentation of blockchain for financial securitization. For example, back in 2019, the Thailand Bond Market Association declared it would adopt blockchain for bond registration. The local Toyota Leasing in the country has issued a blockchain bond.

Extracting Details about BOT’s New Scripless Bond Platform

The Bank of Thailand explains that the new scripless bond platform intends to improve investors’ buying experience, enhance operational efficiency, and reduce overall costs. The DLT Scripless Bond Project was a collaborative effort among eight institutions. The institutions include the BOT, Public Debt Management Office, Thailand Securities Depository, Thai Bond Market Association. Additionally, it contains four selling-agent banks, Bangkok Bank, Krungthai Bank, Kasikorn Bank, and Siam Commercial Bank. According to the Bank of Thailand, the infrastructure will expand to promote all government bonds, including retail and wholesale, in the next phase. Thus, it intends to fulfil all demands of stakeholders.

Earlier, the Bank of Thailand announced the testing of CBDC for corporate transactions. It further aims at launching the state-owned digital currency for retailers. By adopting CBDC’s, countries strive to make crypto available to masses. However, at the same time, nations’ greater motive is to monitor the usage of digital currencies and exercise control. 

Countries are widely adopting the use of Blockchain technology in various sectors, especially concerning governance. The Central Election Commission in Russia recently adopted a blockchain-based voting system to make the process seamless, hassle-free and secure.

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