The World Bank has chosen the Commonwealth Bank of Australia (CBA) to be the sole arranger of the first bond globally “to be created, allocated, transferred and managed using blockchain technology.”
The World Bank said there had been strong indicative investor interest in ‘bond-i’ — Blockchain Offered New Debt Instrument.
“Since our first bond transaction in 1947, innovation and investor satisfaction have been important hallmarks of our success with leveraging capital markets for development,” said World Bank treasurer Arunma Oteh.
“Today, 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 says it issues US$50-US$60 billion in bonds every year.
The bond-i will be based on a platform built developed by the Commonwealth Bank’s Blockchain Centre of Excellence.
The infrastructure for the bond will run on Microsoft’s Azure cloud service, out of one of the company's Washington DC data centres.
The bond is based on a private Ethereum blockchain. CBA said Microsoft conducted an independent review of the CBA blockchain platform’s architecture, security and resilience.
Northern Trust, QBE and Treasury Corporation of Victoria supported the development of the bond.
“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 CBA’s executive general manager of institutional banking and markets international, James Wall.
“We believe that this transaction will be groundbreaking as a demonstration of how blockchain technology can act as a facilitating platform for different participants.”
“We know blockchain has the potential to revolutionise financial services and markets, and this transaction is a significant step towards that future state,” said CBA’s head of blockchain, Sophie Gilder.
“By working collaboratively with the World Bank, we were able to find solutions to technical and legal considerations to make this ground breaking transaction a reality.”
In 2017 CBA announced that the Queensland Treasury Corporation had issued a “virtual cryptobond” as using the bank’s private blockchain program.
The bank last month revealed details of a blockchain-based international trade experiment it had staged, using the technology to facilitate and track the shipment of 17 tonnes of almonds from Sunraysia in Victoria to Hamburg in Germany.