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SIBOS 2020: Bank of Thailand, IBM launch word-first blockchain govt bond

By Sunniva Kolostyak

October 06, 2020

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Bank of Thailand, central bank, digitalThe Bank of Thailand (BOT), Thailand’s central bank, has successfully launched the world’s first blockchain-based platform for government savings bond in partnership with IBM – issuing $1.6 billion in the first week.

Announcing the news at the digital SIBOS 2020 conference, IBM said the blockchain technology is secured on IBM Cloud and offers speedy bond issuance, down from 15 to two days, and reduced operational complexity and overall cost.

Leveraging blockchain technology on the highly secured IBM Cloud, the platform allows investors to benefit from speedy bond issuance time, from previously 15 days to now two days. The efficiency provided by blockchain also reduces operational complexity and the overall cost to issue bonds.

It also streamlines processes of bond registration and sales for issuers, underwriters, registrars, investors and key ecosystem participants.

As a notoriously complex and non-real-time system, government saving bond sales has been relying on duplicated validation steps and manual reconciliation prone to data errors. According to The Thai Bond Market Association, the Thai bond market stood at $44 billion as of June 2019 with government bonds accounting for 37 per cent of the market.

Sethaput Suthiwart-Narueput, Governor of BOT said: “Today’s success marks the first and important step towards the development of Thailand’s market infrastructure for government and corporate securities in the near future.”

“The benefits and business value of using blockchain technology for government bond distribution is shared across stakeholders, from faster bond issuance for investors, decreased workloads and processing time for issuers, underwriters and registrars, to the greater transparency and reduced operating costs across the entire value chain.”

Bank of Thailand now plans to extend blockchain to all other government bonds and target both retail and wholesale investors.

IBM added that the government savings bond platform now becomes an immutable, real-time single source of truth for network participants, which eliminates the redundant validation and 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.

“Bank of Thailand’s success on the government savings bond project is a world’s best practice on how blockchain technology can redefine the way businesses operate, by turning complex processes to a fast, transparent, secure and efficient multiparty collaboration,” Patama Chantaruck, VP for Indochina Expansion and MD of IBM Thailand, added.

“IBM is proud to bring our world-class blockchain on IBM Cloud platform to support Bank of Thailand, and to be working side-by-side with the Bank in this important milestone of Thailand’s financial industry.”

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