Business 24 August 2018Erik Gibbs
World Bank to settle a first-ever $73-million blockchain bond
Before the end of this month, the World Bank will have settled the world’s first public blockchain bond. The US-based bank selected the Commonwealth Bank of Australia (CBA) as the only entity to participate in the trial, which centers on a blockchain-based bond worth $73 million. It’s another example of how the blockchain can revolutionize the financial industry and make the entire space more efficient.
According to Reuters, the bond will be settled on August 28. The two-year bond, nicknamed Bondi (for Blockchain Operated New Debt Instrument), was designed to provide a 2.2% return and is the first time the World Bank has stepped into the blockchain space. The bank expects that blockchain technology could revolutionize bond issuance and help make transactions smoother and quicker.
The platform used to issue the bond was created by CBA’s own internal blockchain lab. It uses a distributed network and is capable of almost immediate settlements. According to a statement made earlier this month by James Wall, CBA’s executive general manager, “You’re collapsing a traditional bond issuance from a manual bookbuild process and allocation process, an extended settlement then a registrar and a custodian, into something that could happen online instantaneously.”
The World Bank offers bonds that carry an AAA rating. It issues as much as $60 billion annually in bonds that are used to support economic progress in developing countries. The institution chose CBA because of Australia’s mature financial infrastructure and investor familiarity in the Australian dollar, one of the most recognizable currencies in the world.
This bond settlement revolves around the world’s first public bond. A public bond is one that is used to attract investments from public investors. The other type of bond is a private bond, which is only offered through private placement. The World Bank bond is a first for a public blockchain-based bond; however, earlier this year, Russian telecom operator claimed the world’s first private blockchain bond with the country’s Sberbank. That deal was reportedly worth around $11.2 million.
Australia is on the forefront of blockchain development and adoption. The Australian Securities Exchange announced earlier this year that it plans to exclusively use distributed ledger technology for clearing and settling equities trades. The exchange anticipates making the transition by the end of next year.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.
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