Austria to Deliver €1.15bln. Government Bonds Via Ethereum Blockchain

Austria’s government is getting ready to utilize the Ethereum (ETH) public blockchain to deliver €1.15 billion ($1.35 billion) of government debt (bonds) in a public sale next week, according to news edition Kleine Zeitung.

Oesterreichische Kontrollbank (OeKB), one of Austria’s largest banks backed by $26 billion in assets in 2017, will supposedly manage the live blockchain notarization facility.

Amid the auction, planned for October 2, the bank will deliver the bonds on behalf of the Austrian Treasury (OeBFA). Austria’s Finance Minister, Hartwig Löger, cited that the department reckons blockchain tech “forms a focus on economic policy,” adding:

“Through setting up the FinTech Advisory Council at the Ministry of Finance, we are developing strategies enabling Austria to benefit optimally from these developments.”

OeKB says this will be the foremost occasion a blockchain-based authorization facility will be utilized as portion of a Federal Bond Auction in Austria.

The process, which has supposedly been effectively tried, portrays a system that has been created by the bank to “notarize data from Austria’s established system” — the Austrian Direct Auction System (ADAS) — “as hash values on the Ethereum public blockchain.”

As Kleine Zeitung explains, the employment of blockchain in this case does not reach the level of issuing tokenized bonds that would work in analogous to the prevailing paper or electronic systems.

In any case, as Markus Stix, managing director at the Austrian Treasury, told Kleine Zeitung, the utilization of the technology has major advantages for both safety and cost reduction:

“This added security contributes to achieving a high level of confidence in the auction process for Austrian government bonds and strengthens Austria’s good standing in the market, which indirectly also has the capacity to contribute to favorable financing costs.”

Earlier this summer, the World Bank collaborated with the Commonwealth Bank of Australia (CBA) to distribute a public bond entirely through blockchain. The A$100 million ($73.16 million) nontransferable two year bond deal carried a yield of 2.251% return.

Likewise, this spring, Sberbank CIB, the enterprise and investment banking division of Russia’s largest bank Sberbank, performed the initial blockchain-based commercial bond deal in Russia.