The World Bank has mandated the Commonwealth Bank of Australia (CBA) to authorize the world’s first blockchain bond. The foreign bond issued in Australian dollars has been dubbed bond-i, an acronym for Blockchain Offered New Debt Instrument, as well as a reference to Sydney’s Bondi Beach.
A joint press release from the World Bank and the CBA describes bond-i as the first of its kind to be fully managed with blockchain technology. The bonds will be entirely created, allocated and transferred using distributed ledger technology to secure every transaction.
Noting the benefits of applying blockchain technology to bonds, the two organizations wrote in the press release that blockchain is capable of streamlining the processes of a number of debt capital market intermediaries and agents. Several benefits of this are listed, including simplifying raising capital and trading securities, improving the efficiency of operations and augmenting oversight of regulations.
Arunma Oteh, World Bank Treasurer, said: ”We believe that emerging technologies, equally offer transformative, yet prudent possibilities for us to continue to innovate, respond to investor needs and strengthen markets.”
The World Bank and CBA have built a private, Ethereum-based blockchain platform on which bonds will be issued and distributed. The CBA said that they were open to using alternative blockchain networks as the space continues to evolve.
Sophie Gilder, Head of Blockchain Innovation Labs at the CBA said that bond-i is a significant step in unlocking the revolutionary potential of blockchain in financial services and markets.
Investor interest in bond-i has already been strong, according to the World Bank, although it plans further consultations with investors prior to launching the transaction.
The World Bank will run its operations for the bond from Washington, DC, with the institution already responsible for issuing between USD 50-60 billion annually in bonds for sustainable development.
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