Chancellor Rachel Reeves has invited key members of the financial services sector to help shape the rules governing a new Digital Gilt Instrument in a bid to modernise the British bond market.
Reeves today hosted a breakfast with the bosses of Revolut, ClearBank, Zilch and Wise, among others, to explore the potential of the new gilts, known as DIGITs, to modernise financial markets by increasing efficiency, reducing costs, and enhancing security.
A paper released by the Treasury said DIGIT will be a transferable security held on a distributed ledger platform (DLT) that will be “independent of the government’s standard debt issuance processes.”
The Treasury and the UK Debt Management Office (DMO) have begun a formal consultation, seeking information to understand what technological options are available to facilitate an issuance, and how DIGIT can be best designed to stimulate wider development and adoption of DLT infrastructure across UK capital markets.
Reeves said: “The UK is leading the way on digital innovation, and the creation of DIGIT will help to transform our world-leading capital markets sector and drive economic growth.”
The introduction of the DIGIT would be the first of its kind for a G7 nation and follows in the footsteps of a similar technology introduced by the government of Estonia.
Diego Ballon Ossio, Fintech Partner at Clifford Chance, told UKTN: “This announcement is welcome news for the industry.
“We have seen significant client interest in the DIGIT initiative since its inception, from domestic and international clients, it is encouraging to see more details being released. This move underscores the UK’s ambition to continue leading the development of global financial markets.
“Introducing the first [digital] gilt of a G7 jurisdiction will be a landmark achievement.”
The deadline for responses to the consultation is 13 April. That will be followed in late spring by the publication of a tender notice and issuing invitation to tender for companies seeking to operate the DLT, with a supplier being chosen in the summer.
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