The Commonwealth Bank of Australia (CBA) is taking on a new challenge after the World Bank mandated it to be the sole arranger of the first bond globally to be created, allocated, transferred and managed using blockchain technology.
The $AUD Kangaroo bond, called ‘bond-i’ – or Blockchain Offered New Debt Instrument – has been developed with the support and input of the investor community including Northern Trust, QBE and Treasury Corporation of Victoria. Once launched, the bond will be issued and distributed on a blockchain platform operated by the World Bank and CBA in Washington and Sydney, respectively.
Founded on a longstanding partnership between the two organisations, the projected is expected to be a success, as World Bank prides itself on its 70-year track record of innovation in the capital markets while CBA’s Blockchain Centre of Excellence has received international recognition.
“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,” CBA Executive General Manager of Institutional Banking & Markets International James 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.”
World Bank’s directives include reducing poverty and promoting lasting development, and issues between US$50- US$60 billion annually in bonds for sustainable development to help realise this goal.
To help reach these goals, the World Bank is focusing on helping countries transition to sustainable economies that are technology-led, while exploring the benefits of disruptive technologies, such as blockchain, across all its operations.
“Helping countries transition to technology-led development is key to our goals of reducing poverty and promoting lasting development. This is at the heart of the World Bank’s Innovation Lab—and this pioneering bond is a milestone in our efforts to learn how we can advise our client countries on the opportunities and risk that disruptive technologies offer as we strive to achieve the Sustainable Development Goals,” noted World Bank Group Chief Information Officer Denis Robitaille.
Because blockchain has the potential to simplify processes for raising capital and trading securities, improve operational efficiencies, and enhance regulatory oversight, this venture is seen by some as an essential sojourn for financial institutions.
“We know blockchain has the potential to revolutionise financial services and markets, and this transaction is a significant step towards that future state. 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,” CBA Head of Blockchain, Innovation Labs Sophie Gilder said.
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