On June 16, 2020, Thailand’s Public Debt Management Office (PDMO) announced that it intends to conduct a small savings bond issue of 200 million baht ($6.43 million) as a trial of blockchain-based savings bonds.
Thai officials revealed that the issue would use state-owned Krungthai Bank’s (KTB) e-wallet. Eventually, the PDMO intends to incorporate more distribution channels, including bank branches, ATMs, and mobile banking.
Typically, the minimum bond face value is about 1,000 baht, but with the blockchain-powered bonds, the value will be an astounding 1 baht. The capability to issue securities such as bonds in lesser quantities is a prevalent tokenization advantage as it greatly reduces the costs of distribution.
In late 2019, the Thailand Bond Market Association devised a policy to adopt blockchain tech for bond registration. Since then, Toyota Leasing in Thailand issued a blockchain-powered bond with the Thai stock exchange, also planning to launch a blockchain-based digital asset platform.
More Nations Embrace Blockchain-Based Bonds
The Thai government had previously issued about 1,000 baht in the Taste, Shop, Spend project, making it stress-free for folks to subscribe to the forthcoming bonds via the KTB e-wallet.
These developments from Thailand represent a shift towards more governments and banks favoring blockchain-based bonds, including China and HSBC Singapore, who also recently ran blockchain-based bond issuance pilots.
Issuers point to lowered costs, better investor access, and improved efficiency as the key reasons for the adoption of digital ledger tech (DLT).
Similarly, Santander Bank, a DLT leader, issued the first end-to-end blockchain bond in Sep. 2019, with an early redemption in December of that year.
According to John Whelan, Head of Digital Investment Banking at Santander, the deal proved unequivocally that debt security could be managed through its full lifecycle on a blockchain.
World Bank Still Loving Its Blockchain-Powered Bonds
Last August, the World Bank teamed with Commonwealth Bank of Australia (CBA) to raise around $80M by issuing a two-year bond using a private version of Ethereum’s blockchain software.
Now the government-run global development bank has issued a second round, bringing the total raised to $108 million.
According to the bank, the bond is unique in that it is the first to be generated, distributed, and managed entirely via DLT.
“CBA now has tangible evidence … that blockchain technology can deliver a new level of efficiency, transparency, and risk management capability versus the existing market infrastructure,” Sophie Gilder, head of the blockchain and AI at CBA, said in a statement.