Image source: Chris McAndrew, CC BY 3.0 via Wikimedia Commons
HM Treasury is planning to run a pilot of the use of a digital gilt instrument (DIGIT) using distributed ledger technology (DLT).
Economic Secretary to the Treasury Tulip Siddiq announced the move in Parliament this week, saying it is part of exploring the use of DLT in financial markets.
Gilts are UK government bonds issued to finance public spending. The pilot will involve issuing a digital version with similar features to conventional gilt and utilising the Digital Securities Sandbox, a live testing environment regulated by the Bank of England that opened for applications in September.
HM Treasury wants to test the use of distributed ledger technology, which keeps a record of transactions involving an entity across a peer-to-peer network of computers, over the lifecycle of a gilt.
Exploring potential
“This will enable the Government to explore the potential benefits that DLT could bring to the debt issuance process, as well as stimulate the wider development of DLT platforms and infrastructures across UK capital markets,” Siddiq said.
She added: “DLT has the exciting potential in the long-term to make transactions more efficient. DLT also brings other benefits across markets, such as automation, greater resilience, and transparency.”
The pilot is experimental in nature and will therefore be separate from the Debt Management Office’s gilt and Treasury Bill operations. This will ensure that the pilot will be independent of the Government’s debt management programme.
