UK government’s digital gilts pilot receives positive response
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UK government’s digital gilts pilot receives positive response 15 November 2024UK Reporter: Jack McRae
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Members of the asset servicing industry have welcomed the UK government’s plans to launch digital gilts.
In her maiden Mansion House speech on Thursday, Chancellor of the Exchequer Rachel Reeves announced that the UK will be “launching a pilot to deliver a Digital Gilt Instrument”.
The pilot, referred to as DIGIT, will use distributed ledger technology (DLT) to issue tokenised government bonds on a blockchain.
Gilbert Verdian, founder and CEO at Quant, believes the decision came at an important time and will allow the UK to secure its leading position in digital finance.
He explains that, amid pressure on the government to demonstrate pro-growth credentials, “it’s unsurprising to see tokenisation at the top of the agenda.”
He adds: “The launch of digital gilts is an important step in cementing the UK’s leadership position in digital finance and can help future-proof our capital markets for the decades to come.”
Kelly Mathieson, chief business development officer at Digital Asset, shares Verdian’s emphasis that the UK must ensure it does not lose its position as a global digital leader.
She says: “Rachel Reeves is right to recognise that the UK must modernise the technology underpinning the £2.5 trillion gilt market to make sure it’s not left behind.”
Mathieson calls on the industry to seize this opportunity to revamp legacy systems.
“The UK and the DMO [UK Debt Management Office] now need to make the right technology choices to avoid replicating the operational challenges of the legacy systems used today,” she says. “The UK gilt market needs technology rails that meet this high regulatory bar, make the market more efficient and liquid, and ensure privacy.”
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