Called bond-i, which stands for Blockchain Offered New Debt Instrument, the bond will become the first one to be managed completely with blockchain technology.
The Commonwealth Bank of Australia (CBA) will deliver the world’s first ever bond transaction on blockchain after winning a mandate from the World Bank to conduct the issuance of the bond. According to the press-release, the transaction will be launched following consultations with a larger group of investors.
Once issued, the bond will be distributed on an ethereum blockchain-based platform operated by CBA and the World Bank in Sydney and Washington. The platform has been developed by CBA Blockchain Centre of Excellence in partnership with Northern Trust, Treasury Corporation of Victoria, and QBE.
The idea to launch the first blockchain bond was revealed by CBA last year during the GMIC conference, where Sophie Gilder, the bank’s head of blockchain, highlighted endless possibilities that such emerging technologies as blockchain offer for businesses.
Blockchain is expected to streamline processes between debt capital market intermediaries and agents. Besides, the technology will make it easier to raise capital and trade securities, improve operational processes, and enhance regulatory control.
“We take a collaborative approach to innovating and have a track record of partnering with other leading financial institutions, government bodies and corporates to innovate through blockchain,” said James Wall, Executive General Manager of International at CBA.
“We believe that this transaction will be ground breaking as a demonstration of how blockchain technology can act as a facilitating platform for different participants. We are delighted to have partnered with the World Bank and fully support its vision of making innovative use of technology such as blockchain to increase the efficiency of financing solutions to better achieve their goal to end extreme poverty.”
The initiative is also part of the World Banks’ mission to stop poverty using innovative technologies like blockchain. Each year, the bank issues between $50 and $60 billion in bonds to support sustainable development. It has an extensive experience of innovations in the capital markets and was the first to launch a globally traded bond in 1989 and a fully integrated e-bond in 2000. Since 1986, the bank has raised about $60 billion Australian dollars from investors worldwide.
“Helping countries transition to technology-led development is key to our goals of reducing poverty and promoting lasting development,” said Denis Robitaille, World Bank Group Chief Information Officer.
“This is at the heart of the World Bank’s Innovation Lab—and this pioneering bond is a milestone in our efforts to learn how we can advise our client countries on the opportunities and risk that disruptive technologies offer as we strive to achieve the Sustainable Development Goals.”
Last month, the CBA successfully completed an experiment with the use of blockchain for international delivery of almonds from Australia to Germany. The shipment was managed via a private blockchain platform developed by the bank on top of the ethereum network.