Austria maximizing on Blockchain
Austria has shown encouragement in the Blockchain space by choosing Ethereum’s to issue Austria’s government bonds in an auction starting next week.
The live Blockchain will be hosted by Oesterreichische Kontrollbank (OeKB) which is Austria’s largest bank. It is scheduled for an auction on October 2nd, on behalf of the Austrian Treasury which is the OeVGA. The set issue amount is US $1.35 billion.
Data will be notarized from Austria’s established system which is the Austrian Direct Auction System (ADAS) as hash values on the Ethereum public blockchain.
Blockchain will enable a more secure system which will maximise investor confidence while also improving Austria’s value in the market which indirectly contributes to favourable financing costs.
Austria’s Finance Minister, Hartwig Löger, has explained that Blockchain technology is part of Austria’s economic policy with a Fintech Advisory Council already set up at the Ministry of Finance.
Governments using Blockchain for Bonds
The initiative by Austria of a government bond through blockchain follows several other governments utilising Blockchain’s capabilities.
A joint initiative for the public bond called Bondi bond is facilitated between the World Bank and the Commonwealth Bank of Australia. It is a two-year public bond worth the US $75 million with a 2.25% return.
In Russia, Sberbank conducted the first Blockchain based commercial bond transaction through the use of Fabric Hyperledger. Furthermore, Hyperledger Fabric is turning out to be the go-to technology for banks, corporations and governments as it integrates Distributed Ledger Technology and traditional institutions. It hosts smart contracts called chain code.
The city council of Berkley in California will be the first municipality to sell municipal bonds on the Blockchain. Blockchain will reduce unnecessary costs due to red tape, fees of issuance and management along with payment of accountants.
Weiss Ratings is a leading provider of ratings of Stocks, Mutual Funds, Cryptocurrencies, ETF’s and Financial Institutions. They had applauded Austria’s efforts in recognising distributed ledgers for governments bonds.
Austria is auctioning $1.3b worth of government bonds to be authenticated with the #Ethereum blockchain. Its government is so enamored with distributed ledgers that the “FinTech Advisory Council” was established to foster growth in the sector. Awesome! These guys get it! #DLT
— Weiss Ratings (@WeissRatings) September 27, 2018
Ethereum Blockchain Developing for Financial Instruments
However, does not come as much of a surprise that Austria chose Ethereum’s Blockchain given that JPMorgan’s Quorum platform runs on it. The Quorum Blockchain ensures issuing of financial instruments are more efficient. It is already used by pharmaceutical companies, Genentech and Microsoft Azure.