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Government to issue bonds using blockchain technology www.zgm.mn

Government bonds that were needed in the domestic market will be more accessible to citizens and investors by combining traditional and advanced methods in the coming year. The Ministry of Finance is planning to sell government bonds based on blockchain technology and at the Mongolian Stock Exchange (MSE). Preparations for forming government bonds with blockchain technology started last year. In this regard, the government adopted a regulation on trading securities based on blockchain technology in February 2018. “If we use such platforms, civilians and businesses will have the wider opportunity to get government securities,” said Minister of Finance Khurelbaatar Chimed. The Australian government also has the experience of issuing bonds worth USD 6 billion via blockchain technology. The blockchain-based bond trading platform was created by a Mongolian entity ICT group.

“Currently, citizens would have to go to a bank to buy government securities, but if they use the blockchain technology, they will be able to subscribe and trade using their mobile phones,” said the CEO of the company. The government has suspended trading its bond in the domestic market in 2017 before the new regulation. The Ministry of Finance has explained that the downturn in the bonds was to avoid increasing government cuts in the domestic market and to prevent the government from capturing the assets of the banks. Experts highlighted that domestic government bonds can stabilize the interest rate. The termination of government bonds has some negative effects. Therefore, it is advisable to trade a fair amount of bonds on a regular basis rather than stopping it. In recent years, commercial banks have placed 20 percent of their total assets in government and central bank bills. The banks have divided USD 6 trillion in a pair of bonds. This led banks to buy central bank bills. According to the Fiscal Framework Statement of 2020 passed by the Parliament last month, the government will not raise as much debt as last year. However, some bonds may be issued to support securities trading and adjustments to local financial markets.



Published Date:2019-06-28