Bank of Thailand has launched a ‘world-first’ blockchain-based platform for government savings bonds, issuing US$1.6 billion within the space of two weeks following a strategic partnership with IBM.
Leveraging blockchain technology built on IBM Cloud, the platform allows investors to access accelerated bond issuance in a move designed to reduce the process from 15 days to two days.
According to Thai Bond Market Association figures, the outstanding Thai bond market stood at $421 billion as of December 2019, with government bonds dominating the local market with outstanding value of $157 billion - accounting for 37 per cent of the market in the process.
Previously, the sale of government savings bonds was viewed as a “complex, multi-party, time-consuming process” that relied on a non-real-time system, with duplicated validation steps and manual reconciliation prone to data errors. Through blockchain technology however, the bond issuance process has been streamlined for issuers, underwriters and registrars, in addition to investors and key ecosystem participants.
The aim is to now establish the government savings bond platform as a “real-time single source of truth” for network participants to help minimise redundant validation while reducing the costs of reconciliation.
“Bank of Thailand's success with the government savings bond project is the latest example of how blockchain technology can redefine the way businesses operate by simplifying complex processes resulting in fast, transparent, secured and efficient multiparty collaboration," said Patama Chantaruck, vice president of Indochina and managing director of Thailand at IBM.
“IBM is proud to bring our world-class blockchain platform and IBM Cloud to support Bank of Thailand, and work side-by-side with them in achieving this important milestone for Thailand's financial industry.”
The project involved collaboration among eight institutions including BOT; Public Debt Management Office; Thailand Securities Depository and the Thai Bond Market Association, alongside selling-agent banks Bangkok Bank; Krungthai Bank; Kasikorn Bank and Siam Commercial Bank - supported by IBM Blockchain as technology and cloud platform partner.
Going forward, Bank of Thailand now plans to extend blockchain to all other government bonds targeting both retail and wholesale investors.