World Bank and CBA to Issue First Blockchain Bond with Ethereum and Microsoft
In a major announcement, the World Bank is preparing to issue the first blockchain bond to the Commonwealth Bank of Australia (CBA) on a private Ethereum-based blockchain, to be run on Microsoft Azure’s cloud platform.
Entitled bond-i, or Blockchain Offered New Debt Instrument, the blockchain bond platform was built and developed by the CBA Blockchain Centre of Excellence. In a statement published on the World Bank’s website, it stated:
“Blockchain has the potential to streamline processes among numerous debt capital market intermediaries and agents.”
World Bank Treasurer, Arunma Oteh explained that it has been working with the CBA over the past year to reach this position, where they are now poised to launch the the first blockchain bond transaction.
As a frequent issuer in the Australian dollar market, since 1986, the World Bank has raised nearly A$60 billion from investors globally.
The CBA has acted as lead manager for a number of IBRD bond issuances in the Australian and New Zealand capital markets, since 2009. In a press release announcement, The World Bank stated that it has:
“mandated the Commonwealth Bank of Australia (CBA) as the sole arranger of the first bond globally to be created, allocated, transferred and managed through its life cycle using distributed ledger technology.”
For this first ever blockchain bond with the World Bank, the CBA said that it used a private Ethereum-based blockchain to meet the necessary capabilities, however it highlighted that as the blockchain space develops, it will be open to others.
The CBA has been highly active with blockchain technology for debt capital markets. In January 2017, it successfully trialled the issuance of semi-government bonds with the Queensland Treasury Corporation in Australia.
The World Bank has stated that it is receiving strong interest from investors for the blockchain bond, and intends to launch the transaction together with the CBA, once it rounds up more members to invest.
ABOUT THE WORLD BANK
The World Bank, or the International Bank for Reconstruction and Development, is a global cooperative owned by 189 member countries to provide loans meeting national and global agendas.
Created in 1944, along with the International Monetary Fund (IMF) at the Bretton Woods Conference, the World Bank and the IMF are based in Washington, and work closely with each other.
Pioneering innovation in the capital markets, it has a 70 year track record of ‘world firsts’, from issuing the first globally traded and settled bond in 1989, to the first e-bond, issued in January 2000.
Today, the World Bank issues between US$50-US$60 billion annually in bonds for sustainable development. It believes that blockchain technology has the potential to:
“help simplify raising capital and trading securities; improve operational efficiencies; and enhance regulatory oversight”
The Commonwealth Bank of Australia and Blockchain
The CBA have worked on many trials in a variety of industry sectors, such as a trade finance blockchain with US bank Wells Fargo, and most recently a blockchain shipment of almonds, traded from regional Australia to Hamburg in Germany, that combined internet of things (IoT) with blockchain technology.
There are a number of social responsibility initiatives utilising blockchain technology. As per a recent BCTech Report, the worlds first blockhain baby was registered with AID:Tech, or Poseidon‘s climate change initiative with Ben & Jerry’s.
