The International Bank for Reconstruction and Development commonly known as World Bank has liaised with the Commonwealth Bank of Australia (CBA) to launch the world’s first public blockchain bond. The bond termed bond-i (acronym for Blockchain Offered New Debt Instrument) is named in reference to Bondi Beach, an iconic spot in Australia’s city of Sydney.
According to sources, the instituted bond is the first of its kind to be created, allocated and managed using blockchain technology all through its life cycle. The bond is expected to raise over $37 million USD for feasibility and deliver-ability test of the new technology, which also serves as the binding technology for cryptocurrencies like Bitcoin.
By definition, blockchain technology refers to a distributed ledger technology that securely records all transactions made on the chain. The choice of its adoption by the apex bank is based on its valuation potential of the blockchain technology to streamline and aid faster processing among numerous debt capital market intermediaries cum agents, and foster more recognition for this emerging technology. By extension, it is also specified to help simplify processes of raising capital, trading securities, operational efficiency and curb effects on regulatory setbacks.
On its launch, the bond will be run and distributed over a consortium blockchain platform jointly owned by the World Bank and CBA. In its affirmation, the World Bank Group said it has received huge positive interests in the bond and would in no distant time kick start transactions after holistic consultation with more investors, with a few notable investors from Northern Trust, QBE and Treasury Corp of Victoria all involved in its early stages.
The CBA who had before now been active in blockchain technology, initiated partnership proceedings with the World Bank since August last year and are quoted in a statement by its Executive General, James Wall saying;
“This represents a milestone development which now turns concept to reality as the first fully distributed issue in the capital markets on blockchain in a completely digital format”.
Blockchain enthusiasts emphasize the benefits of this technology with particular reference to speed of processing while removing redundant processes or institutions and its sound security benefits with notable financial institutions including JP Morgan, BBVA and Agricultural Bank of China already utilizing blockchain-based systems for bond and loan issuance.