Capital markets News

Commonwealth Bank arranging World Bank blockchain bond

commonwealth bank

The World Bank has contracted Commonwealth Bank of Australia (CBA) to arrange a bond on the blockchain. CBA states this is the first bond globally where the end-to-end transaction will only be on a blockchain. There have been other blockchain issuances, but in most cases they are mirrors of real-world transactions.

The CBA is giving the bond the nickname ‘bond-i’ which stands for Blockchain Offered New Debt Instrument. The blockchain will be operated in Washington and Sydney by the World Bank and CBA. Additionally, custodian Northern Trust is providing support.

The bond is part of the World Bank’s annual issuance of $50-$60 billion for sustainable development.

James Wall, Executive General Manager of Institutional Banking & Markets International, CBA 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.”

Denis Robitaille, World Bank Group Chief Information Officer, added: “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.”

Since 2009, the Australian bank has worked with the World Bank on a number of bond issuances. Last year the bank partnered with Queensland Treasury Corp to test a prototype blockchain bond.

CBA developed the solution in its Innovation Lab’s Blockchain Centre of Excellence using a private version of Ethereum. One of the reasons given was Ethereum has the largest and most active development community and provides the required functionality. Though the bank stated it might explore other options in the future. Microsoft provided an independent review of the architecture, security, and resilience.

Other initiatives

Two weeks ago, CBA announced the completion of a blockchain trade finance trial.

There have been several tests for debt issuance blockchains including a JP Morgan test with the National Bank of Canada. Also, BBVA has issued more than one type of corporate debt, and Russia’s largest bank, Sberbank, placed a commercial bond using blockchain.