The UK government is set to adopt blockchain technology and issue digital gilts within the next two years, marking a significant modernization of its financial markets.
The move aims to improve the efficiency of trading and reduce costs in the country’s extensive debt market, which is getting ready for a borrowing round reaching an estimated £297 billion ($382 billion).
During her Mansion House speech on Thursday, Chancellor Rachel Reeves is expected to announce a trial of digital gilt issuance, in line with the new Labour government’s goal of modernizing the financial industry by digitizing government debt.
This process, known as “tokenization,” uses a blockchain system, similar to that of popular cryptocurrencies such as Bitcoin.
The government hopes that digitizing gilts will facilitate faster and cheaper trading, providing benefits to the UK’s large debt market, which is facing a borrowing spree of nearly £297 billion ($382 billion), the second largest in the country’s history.
