The government of Austria is to utilize ethereum’s public blockchain for the issuance of €1.15 billion ($1.35 billion) of government bonds in an auction that starts this October 2nd. Austria’s Finance Minister, Hartwig Löger, says:

“For us, blockchain technology forms a focus of economic policy. Through setting up the FinTech Advisory Council at the Ministry of Finance, we are developing strategies enabling Austria to benefit optimally from these developments.”

One of Austria’s biggest bank, Oesterreichische Kontrollbank (OeKB), will operate the auction procedure for the issue of government bonds on behalf of the Austrian Treasury (OeBFA). OeKB says:

“Following successful tests, a Blockchain notarization service will be used for the first time at the next week’s Federal Bond Auction.”

A system developed internally by OeKB’s IT Department will notarize as hash values on ethereum’s public blockchain data from Austria’s already established system called the Austrian Direct Auction System (ADAS).

They do not go further to issue tokenized bonds in parallel and to complement the established paper or digital systems, but this is the first time a western government is utilizing blockchain tech in bond issuance.

“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,” says Markus Stix, Managing Director at the Austrian Treasury.

We have asked them for more detail, but have not received a response at the time of writing. Will update if that changes.

Since a change of administration in Austria where a conservative party brought europe’s youngest leader to power, Austria has become very friendly to this space, and is now effectively embracing blockchain tech. The Ministry of Finance says in a statement:

“Blockchain and similar solutions will be used in many areas of the digital economy and public administration as an underlying technology.

In order to gather practical experience, various blockchain technologies have been evaluated in terms of their suitability in practice.

By way of additional service, and for quality assurance purposes, on 2 October 2018, an initial live blockchain operation will be launched.”

They expressed ambitions to become world leaders in blockchain tech in October last year when Harald Mahrer, the Austrian Minister of Economy, said:

“To become an innovation leader, we must walk down new paths without taboos and cope with technologies that will radically change many areas of our life tomorrow.”

They further held a blockchain summit in December ahead of Austria taking the rotating EU Presidency in the second half of 2018 during which they said “digitization and new technologies will be a central topic.”

Making this the latest sign that blockchain tech is beginning to be used in live production, with Austria taking a small step towards the digital age when their bonds may well become digital tokens which could unleash considerable efficiency and incredible trading volumes.

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