Israel issues world's first digital bond

Published date06 June 2023
AuthorAharon Katz
Publication titleGlobes (Rishon LeZion, Israel)
The new instrument, according to the bodies involved, demonstrates the immense potential of innovative technologies such as DLT, smart contracts, and tokenization in reducing risk, shortening procedures and improving efficiency and transparency in the financial markets. This joint endeavor marks a significant milestone in revolutionizing the settlement and issuance processes in traditional capital markets

Ministry of Finance Accountant General Yali Rothenberg said, "This is the first trial of its kind in the world, allowing the transfer of money, immediately and in real time instead of through the current slow way."

For the trial, a special platform was set up to allow 12 banks, Israeli and international, to hold digital bond balances and dedicated digital currencies issued by the TASE, only for the purposes of the trial. At the same time the Ministry of Finance issued a bond and implemented a tender through Bloomberg's system, so that the banks could bid specific amounts for them.

The innovation in the trial to raise the money was that the results of the tender were cleared by the new system which for the first time allowed immediate clearing of the digital bond against digital currencies. In other words, instead of waiting several days for the money to be transferred and the bond to be transferred in return, issuing via the blockchain allowed immediate transfer to the winning bank and then the immediate transfer of the digital tokens by the state.

Rothenberg said, "Technology is always developing and requires us to enter into the thick of things and understand how we can improve and streamline.


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