
The UK government is advancing efforts to integrate blockchain technology into its financial system. Finance Minister Rachel Reeves revealed plans to try out digital gilding tools in the country in a recent announcement. The plan will utilize distributed ledger technology (DLT), commonly known as blockchain. Gilded tools are a government bond widely used in the UK and other Commonwealth countries and are considered a low-risk investment option.
Finance Minister Rachel Reeves announced in his first luxury home speech this week that the UK Treasury is developing a “Financial Service Growth and Competitiveness Strategy”. As part of the initiative, the government aims to show how technologies such as blockchain can enhance the country’s fintech ecosystem.
According to the position at the UK Finance Corporation, the office has received feedback from financial institutions that digital gilding in pounds will gain wider investor participation.
“We believe this provides a way for the UK capital market to avoid moving elsewhere to invest in businesses that have invested in jurisdictions where new technologies and capital have been agile in government approaches and regulatory environments,” the Post said.
UK leadership is exploring blockchain technology to support the program for several reasons, as stated in the ministry’s statement. For the upcoming gold-plated instruments, the UK is trying to leverage distributed ledger technology (DLT) to automate, smart contracts and seamless management throughout the securities life cycle. In addition, the blockchain’s unchanged and permanent data storage capabilities can improve transparency within the financial system.
“This goal may have an established digital financial market infrastructure (D-FMI) to run a platform based on the end-to-end trade lifecycle of DLT. This strategy involves the use of an integrated DLT platform for primary issuance, allocation, settlement and custody and the potential to conduct secondary market transactions among pre-approved participants.”
The UK plans to initiate trials of digital gold-plated instruments within six months and conduct a wider rollout in a gradual stage.
In addition to fintech, companies working in other verticals in the UK are also looking for ways to use blockchain technology. For example, Vodafone is seeking to integrate DLT with its operations.