World Bank Preparing for First Ever Blockchain Bond
The World Bank is preparing for the first ever Blockchain bond and has mandated that the Commonwealth Bank of Australia (CommBank), one of the “Big Four” banks in Australia, manage it.
The World Bank typically issues $50 billion to $60 billion in bonds each year as a means of raising funds to help reduce poverty and also improve sustainability in markets across the world. This new Blockchain bond is expected to raise as much as AUD100 million ($73 million).
Bond-i – First Ever Blockchain Bond
This bond will be the first ever in the world to be entirely created, managed, allocated and even transferred using Blockchain technology. This Kangaroo Bond, which is a reference to foreign bonds that are issued in Australia using the Australian dollar, has been named Bond-i.
Bond-i is actually an acronym for Blockchain Offered New Debt Instrument, and is also a nod to the famous Australian landmark, Bondi Beach in Sydney.
When launched, Bond-i will be issued as well as distributed via a Blockchain platform run on a private Ethereum network which will be managed and operated by both the World Bank as well as CommBank.
The platform itself has been developed internally by CommBank’s Blockchain lab and aims to have the parties involved in the Bonds issuance process be participating nodes in the network. These parties include the investors as well as the banks.
CommBank stated that while they currently opted for the Ethereum network since it had the required capabilities, they were open to other networks in the future as the space developed. The Australian bank also said that the current Blockchain had been reviewed by Microsoft to ensure that its architecture, resilience and especially security were good to go.
Achieving Sustainable Development through Blockchain
As part of the official unveiling of the new Blockchain bond, the World Bank and CommBank released a joint statement that Blockchain technology could streamline processes for multiple debt capital market agents as well as intermediaries. This in turn could simplify trading securities and raising capital, improve efficiencies in operations as well as increase regulatory oversight.
The World Bank’s CIO, Denis Robitaille, also issued a separate statement that this pioneering bond was a part of the World Bank’s effort to help their client countries understand the opportunities as well as risks associated with disruptive technologies such as Blockchain as focus on achieving their goals of Sustainable Development.
This is not the only collaboration with regard to using Blockchain technology to issue bonds. Several major banks have been exploring this option, including the Agricultural Bank of China, JP Morgan Chase & Co. and BBVA.