The central bank of Thailand has launched the first blockchain-powered platform for government savings bonds in cooperation with IBM. According to International Business Machines (IBM)’s announcement, the Bank of Thailand has successfully sold savings bonds of $1.6 billion within two weeks.
In launching the DLT-based saving bonds platform, IBM and the Bank of Thailand also worked with seven institutions, including the Thai Bond Market Association, Siam Commercial Bank, Public Debt Management Office, Bangkok Bank, Kasikorn Bank, Thailand Securities Depository Co, and Krugthai Bank. IBM has the role of providing technology and as a “cloud platform partner.”
Benefits of DLT Technology
Before the implementation of DLT technology, the process of the bond sale was complex and time-consuming. The manual system was vulnerable to data errors along with duplicated validation steps. The blockchain-powered platform for the government savings bonds has become “an immutable, real-time single source of truth for network participants, which minimizes the redundant validation and reduces the costs of reconciliation.”
After the successful operation of the platform, the central bank has a plan to expand Blockchain technology for all government bonds both for wholesale and retail investors. As of December 2019, the whole bond market of Thailand valued at $421 billion, Thai Bond Market Association’s data shows.
By using the DLT technology of IBM, the bond issuance time has dropped significantly from 15 days to 2 days. New technology has made the whole process easy and simple, thus reducing the operational cost. The efficiency provided by blockchain “also reduces operational complexity and the overall cost of issuing bonds.”
Thailand’s Interest in Blockchain
Like many other central banks, the Bank of Thailand has become increasingly interested in cryptocurrency and blockchain. For instance, the central bank introduced a pilot program for the central bank digital currency (CBDC) in June. According to reports, it would work with the Hong Kong Monetary Authority for transaction operations.
Blockchain has been employed by many firms over recent months. Recently, China is working to launch the first blockchain-powered hospitals in affiliation with Dalian Medical University. China has submitted the high numbers of patents for blockchain across the globe.