Australia's Biggest Bank Launches World's First Blockchain Bond With World Bank

CBA wins World Bank’s mandate to issue world’s first bond on Ethereum blockchain 20779

CommBank, one of the "Big Four" commercial banks in Australia, said in a release on Friday that it had won a mandate from the World Bank to arrange the issuance of the bond, which will be created, transferred and managed via a blockchain platform.

The foreign bonds which are issued in Australia in its local currency is known as the Kangaroo bond.

The new global bond, which was developed by the CBA Blockchain Centre of Excellence, will be denominated in Australian dollars (AUD), and will be called bond-i ( an abbreviation for Blockchain Offered New Debt Instrument), the World Bank stated. CBA and World Bank based in Sydney and Washington, respectively will be operating the private blockchain technology.

CBA has stated that Ethereum has the "the largest and most active development community globally". Along with it, this blockchain technology "offers the functionality" necessary for issuing the blockchain bond. Its infrastructure is to be handled through Microsoft's Azure cloud computing system by way of a data center in Washington DC.

While the bond uses Ethereum, CBA said it is open to other options in the future. It primarily aims at simplifying the raising and trading of capital assets, the report stated.

"We are delighted to have partnered with the World Bank, and fully support its vision of making innovative use of technology such as blockchain to increase the efficiency of financing solutions to better achieve their goal to end extreme poverty", Wall said.

"We believe that this transaction will be groundbreaking as a demonstration of how blockchain technology can act as a facilitating platform for different participants."

Blockchain could hugely streamline the process of issuing bonds, which has been heavily reliant on physical paperwork for the past 200 years, according to James Wall, a senior institutional banking executive at Commonwealth Bank.

He has also mentioned that the technology will also "enhance regulatory oversight". Bonds are used by businesses to raise capital - when investors buy them, they are essentially loaning money directly to the issuer.

The World Bank issues between US$50- US$60 billion annually in bonds for sustainable developments, and is increasingly funding technological efforts to try and stabilise economies and reduce poverty.

Called "bond-i", the debt issuance already has input from investors including Northern Trust, QBE Insurance and Treasury Corporation of Victoria.

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