Thailand’s central bank has successfully launched a blockchain-based platform for government savings bonds powered by IBM’s blockchain technology.
According to an Oct. 5 IBM announcement, Bank of Thailand already issued a total of $1.6 billion on the platform. The platform itself went live on Sept. 11.
“The government savings bond platform now becomes an immutable, real-time single source of truth for network participants,” The IT giant said.
IBM explained that traditional government bond sale “was a complex, multiparty, time-consuming process that relied on a non-real-time system.” This means validation steps were duplicated and reconciliation is a manual affair prone to data errors.
The blockchain-based platform “minimizes the redundant validation and reduces the costs of reconciliation,” it added.
The advantages of blockchain
By leveraging the central bank’s blockchain platform—which runs on the IBM Cloud—the Thai central bank said it is able to speed up bond issuance from more than two weeks to just two days. Furthermore, the system also reduces operational complexity and the overall cost of issuing bonds, IBM said.
“Bank of Thailand’s success with the government savings bond project is the latest example of how blockchain technology can redefine the way businesses operate by simplifying complex processes,” said Patama Chantaruck, vice president of Indochina expansion and managing director of IBM Thailand. This results “in fast, transparent, secured and efficient multiparty collaboration.”
Blockchain technology—and even more cryptocurrencies—are treated in vastly different ways by the authorities of Asian countries. While some local governments are clearly opposed to crypto assets, Thailand is among the countries that are most friendly towards them.
This was already clear in July 2018, when Modern Consensus reported that Thailand was among the countries that embraced them through regulation. The initiative announced today is also the latest example of blockchain adoption in the Southeast Asia banking landscape, where the adoption of this technology is a major trend.
Other than IBM and the Bank of Thailand, institutions involved in the project include the Public Debt Management Office, Thailand Securities Depository Co., Ltd, Thai Bond Market Association and selling-agent banks, including Bangkok Bank, Krungthai Bank, Kasikorn Bank, and Siam Commercial Bank.
Data published by The Thai Bond Market Association reveals that the outstanding Thai bond market stood at $421 billion as of December 2019. Of all those bonds $157 billion were issued by the local government, equivalent to 37% of the total outstanding bond market.