Commonwealth Bank set to arrange the world's first blockchain bond

Mae Love
August 12, 2018

This bond will be jointly distributed on a blockchain platform managed by World Bank and CBA. Dubbed "bond-i", the instrument will be based on the A$ Kangaroo bond, which is the Australian financial instrument for foreign-based entities that aim to issue debt in Australian dollars but want the funding to be in foreign currency, not in AUD.

The World Bank's treasurer, Arunma Oteh, said in the release that the tech has been prepared for the launch after a year of development with CommBank.

Australia's largest bank says it's latest blockchain foray will substantially streamline capital raising processes in the debt capital markets which are now made up of a complex web of interconnected agents and intermediaries.

The World Bank said it has been exploring the benefits of disruptive technologies, such as blockchain, across all its operations to accelerate progress towards the Sustainable Development Goals.

The crypto sphere is freaking out in a good way right now, as CoinDesk just announced that David Marcus, exec at Facebook, is stepping down from his board position at Coinbase. "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". The platform, designed by CBA's Innovation Lab's Blockchain Center of Excellence, will utilize a private Ethereum blockchain operated by CBA and the World Bank.

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Reportedly, it issues between $50 billion and $60 billion every year in bonds and the bank also provides analysis and advice for developing countries.

They will be the first bond to be created, allocated, transferred and managed with blockchain technology. The global financial institution - formed with a mandate to provide loans for capital projects in countries around the world - has been in the forefront in adopting technology to improve operational efficiency and regulatory oversight. CBA has further informed that the bond would welcome other blockchain technologies in the future times.

Microsoft brought its technical expertise to the project and validated the system's operational capabilities, security and scale.

On the legal side, the law firm of King & Wood Mallesons acted as deal counsel on the bond issue and advised on the legal architecture.

Specifically, the World Bank will use Microsoft's cloud computing platform Azure to run the bond in Washington.

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