The Tel Aviv Stock Exchange (TASE: TASE), the office of the Accountant General at the Israeli Ministry of Finance, and three leading tech companies in the field (Fireblocks, VMWare and BlockFold) last week completed the proof of concept (PoC) phase for Project Eden, issuing a government digital bond on a dedicated blockchain platform.
The new instrument, according to the bodies involved, demonstrates the immense potential of innovative technologies such as DLT, smart contracts, and tokenization in reducing risk, shortening procedures and improving efficiency and transparency in the financial markets. This joint endeavor marks a significant milestone in revolutionizing the settlement and issuance processes in traditional capital markets.
Ministry of Finance Accountant General Yali Rothenberg said, "This is the first trial of its kind in the world, allowing the transfer of money, immediately and in real time instead of through the current slow way."
For the trial, a special platform was set up to allow 12 banks, Israeli and international, to hold digital bond balances and dedicated digital currencies issued by the TASE, only for the purposes of the trial. At the same time the Ministry of Finance issued a bond and implemented a tender through Bloomberg's system, so that the banks could bid specific amounts for them.
The innovation in the trial to raise the money was that the results of the tender were cleared by the new system which for the first time allowed immediate clearing of the digital bond against digital currencies. In other words, instead of waiting several days for the money to be transferred and the bond to be transferred in return, issuing via the blockchain allowed immediate transfer to the winning bank and then the immediate transfer of the digital tokens by the state.
Rothenberg said, "Technology is always developing and requires us to enter into the thick of things and understand how we can improve and streamline.
Fireblocks cofounder and CPO Idan Efrat said, "We work in 30 countries and we see things moving fast towards use of digital assets in various financial areas."
Is Israel moving towards a digital currency?
Does the successful trial bring Israel nearer a digital currency that would allow the swift transfer of remote payments by sending currency directly between wallets? Many countries are conducting trials in such a currency and studying the advantages of such systems and their drawbacks. No such country has issued such a digital currency although the Bahamas issued a digital currency called the sand dollar.
The Bank of Israel maintains restraint when it comes to issuing a digital currency, which could revolutionize the transfer of funds 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 in the future it will become clear that the issuance of a digital shekel will have significant justification, since it could be used as an efficient and safe platform for advanced technological uses.
Published by Globes, Israel business news - en.globes.co.il - on June 6, 2023.
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