HM Treasury outlined its digital strategy for wholesale financial markets on Tuesday, setting out expansive ambitions that include a willingness to replace centralized solutions with decentralized ones. The strategy also provided updated details on DIGIT, the government’s planned digital bond issuance.
When Treasury first outlined DIGIT plans in March, details were sparse, with many questions posed to industry. The proposal called for an entirely new product issued on a DLT platform as part of the Digital Securities Sandbox, designed to be short dated and separate from the government’s main debt issuance program.
Treasury has now added several details, including on-chain settlement capabilities. The government also aims to support over the counter trades using smart contracts and ensure interoperability with traditional platforms. Many current DLT infrastructures have already integrated with conventional central securities depositories (CSDs) to accommodate both technology focused and traditional investors. The SIX Digital Exchange was the first to do so in 2022, while HSBC’s Orion platform is embedded in Hong Kong’s CMU and Euroclear has linked its D-FMI DLT platform with its main CSD.
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