Austria Government To Leverage Ethereum Blockchain On $1.35 Billion Bond Auction

01. Oct 2018 Posted by Guest on News

The Austrian government has moved to leverage the power and capabilities of the Ethereum blockchain.  The Austrian Federal Financing Agency since has announced plans to auction $1.34 billion in federal bonds, notarized in a public ledger.

The auction process is to take place on an internal service dubbed the Austrian Direct Auction System.  If successful, this will be the first time that the country’s federal bond auctions has taken place on a blockchain-powered public ledger. It will also be a big achievement for the country’s financial and information service provider OeKB Group.

The OeKB Group which is one of Austria’s biggest banks is to issue the bonds using the blockchain notarization service.  The bank has already tested the service after developing it internally to notarize data.

The use of blockchain technology, in this case, does not go as far as issuing tokenized bonds. Instead, the digital ledger technology will only offer the benefits of security as well as cost reduction.

The use of Ethereum blockchain for a project of such significance does not come as a surprise.  The blockchain has proved repeatedly that it can handle such operations while ensuring security and trust.

Bonds auctioning on an Ethereum blockchain underlines Austria’s growing interest on the emerging technology. The country’s finance minister has already reiterated that blockchain technology is an economic policy for the country.

Austria has already developed a Fintech Advisory Council under the Ministry of Finance. The council is tasked with the responsibility of exploring potential application areas of the technology. Echoing similar sentiments is OEKB Group board member Angelika Sommer-Hemetsberger who believes the technology offers great potential. For instance, there is growing focus in using the technology to enhance the quality of banking processes.

Austria is not the first country to leverage the power of blockchain technology in the issuance of bonds. Investment and corporate arm of Russia’s largest bank Sberbank CIB conducted the first commercial bond transaction on a blockchain early in the year.

The Commonwealth Bank of Australia, as well as the World Bank, is also considering issuing bonds through blockchain. The two have already signed a deal entailing two-year bonds worth $73.16 million, priced at 2.251%.