The Tel Aviv Stock Exchange (TASE: TASE), the Accountant General’s Office of the Israeli Ministry of Finance and three industry-leading tech companies (Fireblocks, VMWare and BlockFold) last week completed a proof-of-concept (PoC) phase for Project Eden, a government digital bond issuance on a blockchain platform. Dedicated.
The new tool, according to the relevant authorities, demonstrates the huge potential of innovative technologies such as DLT, smart contracts, and tokens in reducing risks, shortening procedures, and improving efficiency and transparency in financial markets. This joint endeavor marks a significant milestone in revolutionizing settlement and issuance processes in the traditional capital markets.
“This is the first experience of its kind in the world, which allows for immediate and real money transfer instead of the current slow method,” said Accountant General of the Ministry of Finance, Yale Rotenberg.
For the trial, a special platform was set up to allow 12 banks, both Israeli and international, to hold balances of digital bonds and allocated digital currencies issued by TASE, solely for the purposes of the trial. At the same time, the Ministry of Finance issued a bond and conducted a tender through the Bloomberg system, so that banks could offer them specific amounts.
The innovation in the fundraising experience was that the results of the tender were approved through the new system which for the first time allowed instant clearing of digital bonds against digital currencies. In other words, rather than waiting several days for the funds to transfer and the bond to be transferred in return, the issuance via blockchain allowed immediate transfer to the winning bank and then immediate transfer of digital tokens by the state.
Rothenberg said, “Technology is always evolving and requires us to get in the thick of things and understand how we can improve and simplify it.
“We operate in 30 countries and we see things moving quickly towards the use of digital assets in various financial areas,” said Idan Efrat, Fireblocks co-founder and Head of Procurement.
Is Israel heading towards a digital currency?
Will the successful experiment bring Israel closer to a digital currency that allows for the rapid transfer of payments remotely by sending the currency directly between wallets? Many countries are experimenting with such a currency and studying the advantages and disadvantages of such systems. No country has issued such a digital currency although the Bahamas has issued a digital currency called sand dollar.
The Bank of Israel maintains restraint when it comes to issuing a digital currency, which could revolutionize money transfers in Israel. According to the Bank of Israel’s latest publication on the subject, one of the factors that will support the bank’s decision to issue such a currency is “technological developments in the payments system.” The bank explains that it is possible that it will turn out in the future that the issuance of the digital shekel will have a great justification, as it can be used as an effective and secure platform for advanced technological uses.
Published by Globes, Israel business news – en.globes.co.il – on June 6, 2023.
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