On August 9th, 2018, the International Bank for Reconstruction and Development (World Bank) published its mandate to the Commonwealth Bank of Australia (CBA) as the sole arranger of the first bond globally to be created, allocated, transferred and managed through its lifecycle using blockchain technology.
The new bond was built and developed by the CBA Blockchain Center of Excellence team and conducted with the support and input of the investor community including Northern Trust, QBE, and Treasury Corporation of Victoria. ‘Bond-i’, or ‘Blockchain Offered New Debt Instrument’ will be designated in Australian dollars (AUD) and will be run in the World Bank infrastructure in Washington, D.C. on the Microsoft Azure cloud computing platform. Microsoft will validate the system’s operational capabilities, security, and scale.
Yesterday @treasury_wb made history by creating the first global #blockchain bond. The @WorldBank has mandated @CommBank as the sole arranger for bond-i, the first global bond to use distributed ledger technology. Learn more about bond-i here: https://t.co/LyO6pHh9Rt pic.twitter.com/bEM5q0m67i
— World Bank (@WorldBank) August 10, 2018
In the press release, the World Bank refers to its 70-year track record of innovation in the capital markets, having been the first to issue a global format bond in 1980 and the first to issue an electronic bond (e-bond) in 2000. The World Bank generally issues between $50 to $60 billion in bonds annually as part of its objectives to reduce poverty and increase sustainability in relation to global markets.
“We are therefore delighted that after working with our information technology colleagues and the Commonwealth Bank of Australia over several months, that we are now in a position to launch our first blockchain bond transaction. CBA’s commitment and Microsoft’s wealth of experience have been instrumental to achieving this historic milestone. Our goal is to continue to harness innovation for the benefit of markets and our mission of ending poverty and boosting shared prosperity”. Arunma Oteh, World Bank Treasurer
The CBA, who are behind the development of the platform, said that the project was built on the Ethereum network and was supervised and evaluated by the technical team at Microsoft for architecture, security systems, and to ensure standards in line with the market and other platforms.
This will be the first time that a bond is issued, stored and managed completely in the blockchain, which will bring increased security and privacy and will shorten the times associated with transactions when compared to traditional methods.