The Government of Austria, which has fallen deep into debt just like most countries on the planet is looking to employ the use of the Ethereum blockchain as part of the solutions to its debt problem. This is expected to be done by auctioning some Ethereum issued and authenticated government bonds worth about 1.15 billion euros.
Desperate Times Calls for Bonds Auctioning
The country will be auctioning bonds worth about raise 1.15 billion euros come, October 2, 2018, in its attempt to stay debt free. The country will be offering two classes of bonds up for auction.
The first class will be maturing in about five years time and the other class will be maturing in 10 years time. The 10-year maturing bond is expected to yield an interest of 0.78% yearly which will then be compounded.
For those not familiar with how Government bond work, you can easily relate it to a form of IPO/ICO whereby the shares available for sales represents a stake in the Government task returns. So instead of having to deal with less certain situations that involve several ups and downs when it comes with partaking in an ICO or IPO, investors in Government bond auctions are more guaranteed of getting returns on their investments. Although the interest is far below what an ICO or IPO could yield, the guarantee level is almost 100%.
Issuance of Bonds
OeKB (Oesterreichische Kontrollbank) bank will be in charge of issuing the Austrian Government bonds. In the country’s effort to minimize the costs of operation and also maximize efficiency, the bond issuance will be done using the Ethereum blockchain network. The network will also be used for authentication of the bonds. Although the bonds will be issued using the Ethereum Network, it will not be sold like a traditional token. So this is clearly not a token sales as the bonds will not be tradable.
What the Government has to Say
The Austrian finance minister Hartwig Löger said the following in a statement:
“For us, blockchain technology is an important part of economic policy. With the establishment of the Fintech Council in the Ministry of Finance, we are developing strategies so that Austria can profit from these developments as much as possible.”
The use of blockchain by a country such as Austria, which is well-known to be quite conservative, is a welcomed move and it is also regarded as an overall positive news for the world’s Crypto industry.