Commonwealth Bank of Australia (CBA), a large financial institution with nearly $1 trillion in assets, has reportedly been mandated by the World Bank to launch the world’s first blockchain-based bond.
The new international 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.
Strong “Investor Interest” In Blockchain Bond
Moreover, the bank’s press release notes that bond-i will be the world’s first bond to be “created, allocated, transferred, and managed” using distributed ledger technology (DLT). “Indicative investor interest has been strong” in this type of financial instrument, the World Bank revealed
The press release also noted that the CBA and the World Bank had consulted with a “broad set of investors” before deciding to create bond-i - and - according to both institutions:
Blockchain has the potential to streamline processes among numerous debt capital market intermediaries and agents. This can help simplify raising capital and trading securities; improve operational efficiencies; and enhance regulatory oversight.
$50-$60 Billion In Bonds For “Sustainable Development”
The World Bank, which provides loans to countries for capital projects, currently issues $50-$60 billion in bonds each year for “sustainable development.” Established in 1945, the international financial institution issued the world’s first globally traded bond in September 1989. It also introduced the first electronic bond (e-bond) in January 2000.
Arunma Oteh, the Treasurer and President of the World Bank, stated that the institution had conducted its first bond transaction in 1947, and issuing the new blockchain bond would further help in “leverage capital markets for development.”
Oteh also said that the decision to launch bond-i came after several months of consultation with the CBA and various IT firms that work closely with the World Bank. She added that the issuance of the blockchain-based bond was part of the bank’s other efforts which include “ending poverty and boosting shared prosperity.”
“Technology-Led Development” Amid Allegations Of Money Laundering
Meanwhile, Dennis Robitaille, the chief information officer of the World Bank Group, stated that “technology-led development” would be instrumental in reducing poverty, and bond-i was a key milestone in the bank’s efforts in helping countries leverage “disruptive technologies.”
Ironically, CBA’s blockchain bond has been launched just months after the the bank had been under investigation by Banking Royal Commission for alleged involvement in money laundering. The CBA was also found to have not reported George Vrettakos, one of its employees, to the police after he was said to have created fake loan accounts to buy million-dollar properties and embark on a cocaine binge.