Bank of Montreal tests debt issuance on Blockchain in its latest collaboration with Ontario Teachers’ Pension Plan. The project aims to reduce costs related to transactions in a number of public sectors.
16 August, Crypto Today – The Bank of Montreal and Ontario Teachers’ Pension Plan reported that they have jointly tested a Canadian-dollar debt deal utilizing Blockchain technology.
Bank of Montreal Tests Debt Issuance on Blockchain
During the test transaction, the bank has stated it sold $250 million Canadian dollars worth, which is around $190 million, of one-year floating rate deposit notes to the teachers’ pension fund. The transaction has involved Blockchcian technology. This came reportedly as the first use of the nascent technology for a Canadian dollar “fixed-income issue.”
Some of the online reports state that Bank of Montreal’s BMO Capital Markets unit has formed a prototype Blockchain-based settlement system. This system allows issuers and buyers to track transactions via Blockchain. The bank also reportedly plans to exploit technology to secure major cost savings across compliance, financial reporting, and clearing and settlement of fiat transactions.
The head of global trading at BMO Capital Markets, Kelsey Gunderson, has stated:
“This is an important first step in developing a fully functional blockchain capability that we think will eventually allow primary and secondary trading of securities.”
Global Banks Adopt Blockchain
The technology used by the bank is the first to demonstrate the viability of a platform using the Blockchain. The latter is a digital ledger of transactions that is shared among a network of computers.
Bank of Montreal has built a prototype settlement system that allows the security issuer and buyer to review the transactions on the Blockchain. They can also verify the accuracy of the term sheet data and payment amounts.
This step by the Bank of Montreal follows other banks’ initiatives in adopting the Blockchain technology. Some of the major global financial institutions have also been attempting to pilot similar projects. For instance, JPMorgan Chase and the National Bank of Canada have tested a US debt deal over Blockchain back in April.
That time, the National Bank has sold $150 million of one-year floating rate certificated of deposit and mirrored the sale process via a Blockchain application that has been developed by JPMorgan.
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