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Austrian Government to Issue Bonds Using Ethereum Blockchain

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Austria, Ethereum, Blockchain

The government of Austria will issue $1.35 billion or €1.15 billion of government bonds using the Ethereum blockchain.

Oesterreichische Kontrollbank (OeKB) is one of the biggest banks in Austria with about $26 billion in assets in 2017. The bank will  operate the live blockchain notarization service.

An auction will take place on October 2. The bank will then issue the bonds on behalf of the Austrian Treasury (OeBFA).

Hartwig Löger is the Finance Minister of Austria and said:

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

Ethereum Will Power Notarization Service

According to OeKB, this is the first time Austria will use a blockchain-based notarization service as part of a Federal Bond Auction. The officials tested the procedure successfully.

Moreover, it will use a system that the bank developed internally to “notarize data from Austria’s established system — the Austrian Direct Auction System (ADAS) — “as hash values on the Ethereum public blockchain.”

Further, Kleine Zeitung notes that the use of the Ethereum blockchain will not involve issuing tokenized bonds that function in parallel to the existing paper/digital systems.

However, Markus Stix, the managing director at the Austrian Treasury said that the use of the blockchain provides important advantages:

“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 favourable financing costs.”

Additionally, the World Bank and the CBA (Commonwealth Bank of Australia) formed a joint initiative. The venture seeks to issue a public bond exclusively through the Ethereum blockchain.

The $100 million ($73.16 million) deal includes two-year bonds priced to yield a return of 2.251 percent.

Furthermore, Sberbank CIB is the investment banking and corporate arm of Sberbank, the largest bank in Russia. The company conducted the first commercial bond transaction in Russia based on the Blockchain.

 

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