According to a recent report, The Bank of Thailand (BoT) has announced that it has initiated a pilot of the DLT Scripless Bond Project that utilizes blockchain technology.
According to the project’s outline, part of BoT’s mission to prepare its people for disruptive technologies, Bank of Thailand (BoT) has started to look at the benefits of distributed ledger technology (DLT) and blockchain technology.
BoT expects blockchain technology to enable all stakeholders to have access to the same information, increasing efficiency and transparency.
Once completed, this initiative will help increase efficiency, whilst also reducing the total operating costs of the entire system, and it will be developed later on to form the basis for Thailand’s market infrastructure for government and corporate securities. This is one of the world’s first uses of blockchain technology in the field of government savings bond sale
The Bank of Thailand will conduct the pilot in collaboration with a number of organizations including the Public Debt Management Office, Thailand Securities Depository (TSD), Thai Bond Market Association, and Selling Agents that include Bangkok Bank, Krungthai Bank, Kasikorn Bank, and Siam Commercial Bank. IBM is the technology partner for the project.
The project manifesto outlays the objectives that BoT plans to meet with The DLT Scripless Bond Project, which is aimed not only to enable BOT to gain deeper insights and develop capabilities and the implications of using blockchain technologies, as well as potential benefits in reducing overall costs to the industry, as well as maximizing operational process efficiencies.
In order to identify both weaknesses and opportunities for blockchain technology, the project prototype was designed and developed with the following key features:
- Data integration and bookkeeping: to integrate all relevant data as the single source of truth and record all transaction activities
- Real-time information accessibility: to access information in near real-time to enable more rapid analysis and more effective management
- Smart contracts & automation: to facilitate more effective operations through smart contracts so as to maximise the reduction of manual intervention.
- Reports and monitoring: to monitor information and enable visibility to authorized participants (on a ‘need-to-know’ basis).
The central bank said that it has started to look at the benefits of distributed ledger technology (DLT) and selected the savings bond sales processes as its first use case.
This is one of the world’s first uses of blockchain technology in the field of government savings bond sales, according to the project whitepaper.
Bonds-related processes are complex and involve a number of participating entities. In the existing setup, it takes 15 days for investors to receive their bonds after receiving an allocation.
The Bank of Thailand said that the Proof of Concept (POC) has demonstrated that the DLT Scripless Bond could successfully meet core business demand while generating business values for all relevant parties.
According to the official announcement, the key benefits include:
- Individual investors are able to receive the bond within 2 days, from its current period of 15 days. They can also purchase a bond with their full rights from any Selling Agent without the current purchasing limit per bank
- Selling Agents, TSD, and BOT can reduce the complexity of their operational processes.
- Bond Issuers can monitor and manage bond sales in real time, increasing competition among Selling Agents.
In the future, the Bank of Thailand plans to develop the system so as to form the basis for Thailand’s market infrastructure for government and corporate securities.
The Proof of Concept of this project is only the first step toward the real-world implementation that would initially cover government savings bond, which is expected to begin by the end of 2019, the official statement said.
