Last week the UK’s Chancellor confirmed plans to issue a pilot Digital Gilt Instrument (DIGIT), the UK equivalent of a Treasury bond, using distributed ledger technology (DLT). This week Tulip Siddiq, the Economic Secretary to the Treasury added a few details. The pilot will be part of the Digital Securities Sandbox, but outside of the Debt Management Office that is responsible for all gilt and Treasury Bill operations.
Before the announcement, the Financial Times reported that Siddiq wanted to forge ahead with DIGIT despite opposition from the Debt Management Office (DMO). It cited one former minister and several department officials who said the DMO was resisting the move.
If the DMO is resistant, then it makes sense to sidestep the department otherwise the trial would be doomed before it started. But if the pilot proves successful, will the DMO be willing to run with it? In the most positive scenario, if after the pilots there is genuine demand for gilts in tokenized form by industry players, then the DMO can respond. That said, tokenization is a long game, not a sprint.
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