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Israel is planning to issue government bonds using a blockchain technology platform, the Tel Aviv Stock Exchange (TASE) said Wednesday.

A government bond is a debt security issued by a government to support government spending and obligations. They are often considered low-risk investments since the issuing government backs them.

In Israel, as of October 19, 2022, a 10-year government bond has a 3.43 percent yield.

Local governments may also issue bonds to fund projects such as infrastructure, libraries, or parks. They often carry certain tax advantages and exemptions for investors.

The TASE explained that the implementation of advanced technologies – such as blockchain – would reduce costs, shorten the duration of issuance and clearing of government bonds, improve transparency, and mitigate risks.

Israel’s Finance Ministry is examining alongside the TASE an application for the sale of digital government bonds on a blockchain platform.

The TASE and Israel’s Accountant General said they were motivated by developments in financial markets in recent years, including using the Blockchain Distributed Ledger Technology as well as possible issuance of central bank digital currencies.

As part of the pilot issuance, local and foreign banks will take part in a live test and will be connected to a dedicated blockchain system that will be developed by the TASE and private firms.

The issue will ultimately be in digital currency and transferred to electronic wallets.