The Philippines government is on the verge of commencing a new phase in its government bond tokenization path. Last year, it took a significant step by tokenizing bonds specifically aimed at institutional investors. This was followed by the release of 90-day Treasury Bills accessible to retail investors. Now, in December, the Bureau of the Treasury is set to distribute longer-term tokenized Treasury Bonds, or GBonds, targeting consumers.

Empowering Filipinos with Easy Bond Investments

Ralph Recto, the Philippines Secretary of Finance, emphasized the vision of a future where investing in government bonds becomes a common occurrence for Filipinos. With just a few simple swipes on their devices and as effortless as ordering food delivery, people can now secure their futures from the comfort of their homes.

Primary Distribution Mechanisms

The primary distribution mechanisms for these tokenized bonds will be through GCash and PDAX. GCash, a widely used wallet app with 94 million users and recently valued at $5 billion, plays a crucial role. Ant, the owner of Alipay, holds around a third of GCash's parent company Mynt, while MUFG owns 8%. PDAX, a cryptocurrency exchange with approximately four million users, has already been distributing Treasury Bills with a minimum investment of 500 pesos ($8.52). This provides convenient access for a large number of investors.

Reducing Administration Costs

The country already has retail government bonds, but the minimum investment is ten times higher at 5,000 pesos. PDAX, which is suspected to be providing the tokenization technology, highlights one of the key benefits - reducing administration costs to support smaller denominations. This makes it more accessible for a wider range of investors and simplifies the investment process.

Historical Background

In 2020, the government initially explored using blockchain for retail government bonds and launched the Bonds.PH app in collaboration with UnionBank. At that time, the bank also partnered with PDAX for the blockchain aspect. This shows the government's continuous efforts and innovation in the field of bond tokenization.

Global Trends in Tokenized Government Bonds

Issuing tokenized government bonds as digital twins or natively digital bonds is gaining popularity worldwide. While most still target institutions, Slovenia became the first European state to issue a digital bond, and the UK is planning to do so in the next two years. The largest digital government bond so far was a multicurrency green bond issuance worth $756m by Hong Kong. This indicates the growing importance and potential of tokenized government bonds on a global scale.