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| Israel relies on Blockchain technology |
JQMEDIA-The Israeli government intends to issue digital bonds by utilizing blockchain-based technology.
In this regard, a joint team has been formed to prove the concept of digital bond issuance.
This news comes amid Israel's plans to issue a digital shekel digital central bank currency (CBDC).
Blockchain development in traditional financial technology (TradFi) is steadily advancing. This time, the innovation comes from the Government of Israel, which is working on issuing digital bonds by utilizing blockchain-based technology or distributed ledger technology (DLT).
In this regard, the Israeli Ministry of Finance and the Tel Aviv Stock Exchange (TASE) have formed a joint team to proof-of-concept digital bond issuance on the DLT platform. The team is currently conducting a study on proof of concept (PoC) technology which includes a new series of digital bonds and their issuance to system participants.
The initiative, which is called the Eden project, is believed to be able to cut costs normally required when issuing bonds in the traditional financial world. In addition, it is believed that the duration of issuance and clearing of government bonds will be shorter. That way, the use of DLT is expected to simplify the process while minimizing risk.
Responding to this, TASE's Chief Executive Officer (CEO), Ittai Ben-Zeev, said that the financial market is currently in a period of drastic transformation. The use of revolutionary technology will affect the way consumers operate and invest in the global arena.
“We hope Israel can become the spearhead for financial technology. At the same time, being the first to implement the latest (blockchain) technology and increase public access to the capital market sector," explained Ittai Ben-Zeev.
The Israeli government's digital bond issuance trial will involve banking parties, both international and local. Later, each publisher will be connected to a special blockchain system that will be developed by TASE.
The Trial Also Involves Digital Currency
As is known, Israel is also planning to issue a central bank digital currency (CBDC) named digital shekels. The Central Bank of Israel is also a member of the Icebreaker project initiated by the International Bank for Settlements (BIS).
Under the project, Israel and several other countries will pilot cross-border payments using CBDCs. In this regard, the Deputy Governor of the Central Bank of Israel, Andrew Abir, explained that efficient cross-border payments are vital for a country with a small and open economy.
"This project is part of Israel's plan to see the potential for Digital Shekel issuance," said Andrew Abir.
Accordingly, the Israeli government's blockchain-based digital bond trial will also involve digital currencies. This is because the process of transferring funds from participants to digital bonds will use digital currency which is transferred from the participant's e-wallet to a special e-wallet.
Senior Deputy Accountant General & Head of Financing Division, Gil Cohen, explained that the Israeli Ministry of Finance always closely monitors technological developments affecting the capital market, including blockchain. He admitted that in the past 6 months he had conducted research on the use of blockchain for digital currency issuance.
“Now we are taking the big step of researching the issuance of sovereign bonds on the blockchain. Steps that have the potential to create progress in the capital market sector and complete the management of government debt, "added Gil Cohen.
Issue First Crypto Trading Company License
The attitude of the Israeli Government towards the presence of crypto continues to soften. Last September, the Commissioner for Israeli Capital Markets, Moshe Barkat, granted Hybrid Bridge Holdings (HBH) a permit to be able to carry out the operations of the crypto trading business.
HBH Founder & CEO, Giora Ran, claims to be the first local crypto trading company to get an operating license from Israeli regulators. Currently, they are building infrastructure that connects cryptocurrencies with fiat currencies in banks that have already passed the know your customer (KYC) process.
“We have developed a system that aims to help banks and traditional financial entities operate in the crypto world,” said Giora Ran.