The Israeli Ministry of Finance and the Tel Aviv Stock Exchange (TASE) have Announced a collaborative study to explore the feasibility of issuing government bonds through distributed ledger technology (TLDs).

Yali Rothenberg, the country’s attorney general, revealed that the move to explore the use of DLT is to open nations to “new possibilities for public debt issuance and management.” For now, TASE and the Ministry of Finance have created a joint team to test a proof of concept for the new venture.

Entitled Project Eden, the effort will see Israeli DLT infrastructure company Fireblocks play a critical supporting role in the study. Per the announcement, multi-cloud service provider VMware will also participate in the study after having a previous stint in the Bank of Israel’s digital shekel pilot program earlier in the year.

TASE and the Ministry of Finance are excited that the issuance of DLT bonds is the right step for the country’s financial sector following recent technological developments in website 3. Both institutions noted that the move has the potential to foster “material and advanced change” in stock markets.

“At the Ministry of Finance, we closely monitor prominent technological developments affecting capital markets around the world, including blockchain,” said Gil Cohen, Senior Deputy Accountant General and Head of the Finance Division.

“We are now taking the next big step of examining government bond issuance on blockchain, a step that has the potential to create a more advanced and accessible capital market that will streamline government debt management,” he added.

The process of obtaining and managing government debt is often tedious, characterized by layers of local and international parties, while strict regulatory control further complicates the entire process. Some experts think that the use of DLT could reduce costs and improve the transparency and efficiency of the process.

DLT and Israel are a match made in heaven

In the Middle East, Israel has emerged as one of the strongest adopters of DLT technology, incorporating the technology into its government processes. The largest implementation of DLT is in the development of a central bank digital currency (CBDC), which the Bank of Israel is currently testing.

So far, two main tests have been carried out, both of which rely heavily on DLT. The first was based on the use of smart contracts, while the second focused on how to protect the identities of users using DLT.

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