World Bank, CBA To Deliver World’s First Blockchain Bond

Announcements, Blockchain, News | August 10, 2018 By:

The Commonwealth Bank of Australia (CBA) has been selected by the World Bank to arrange the world’s first blockchain bond.

The World Bank issues between $50 million to $60 billion annually in bonds for sustainable developments, and is increasingly funding technological efforts to try and stabilize economies and reduce poverty. It has mandated CBA as the sole arranger of the first bond globally to be created, allocated, transferred and managed using blockchain technology.

The “$AUD Kangaroo bond,” Blockchain Offered New Debt Instrument (bond-i), has been developed alongside the Northern Trust, QBE, and Treasury Corporation of Victoria. Once launched, the bond will be both issued and distributed on a blockchain platform operated by the World Bank and CBA.

“We take a collaborative approach to innovating and have a track record of partnering with other leading financial institutions, government bodies and corporates to innovate through blockchain,” said James Wall, Executive General Manager of Institutional Banking & Markets International, CBA. “We believe that this transaction will be groundbreaking as a demonstration of how blockchain technology can act as a facilitating platform for different participants.”

CBA said the project is using the ethereum blockchain because the network has the largest and most active development community globally, and offers the functionality they require. However, other blockchains are developing rapidly and CBA said that they remain open to other options in the future.

“We know blockchain has the potential to revolutionise financial services and markets, and this transaction is a significant step towards that future state,” said Sophie Gilder, Head of Blockchain, Innovation Labs, CBA. “By working collaboratively with the World Bank, we were able to find solutions to technical and legal considerations to make this ground breaking transaction a reality. This project further solidifies CBA’s position at the forefront of blockchain technology and we are excited to build on this, in partnership with our clients.”

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.

“Helping countries transition to technology-led development is key to our goals of reducing poverty and promoting lasting development, said Denis Robitaille,” World Bank Group Chief Information Officer. “This is at the heart of the World Bank’s Innovation Lab—and this pioneering bond is a milestone in our efforts to learn how we can advise our client countries on the opportunities and risk that disruptive technologies offer as we strive to achieve the Sustainable Development Goals.”

An independent review of the CBA blockchain platform’s architecture, security and resilience was conducted by Microsoft. While law firm of King & Wood Mallesons acted as deal counsel on the bond issue and advised on the legal architecture for its implementation.

“Microsoft’s experience and support have also been instrumental to achieving this historic milestone,” said Arunma Oteh, World Bank Treasurer. “Our sincere appreciation to our pioneer blockchain bond investors, who are partnering with us on this transaction because of our common desire to strengthen markets, improve efficiency and transparency, and enable more robust issuance processes. Our goal is to continue to harness innovation for the benefit of markets and our mission of ending poverty and boosting shared prosperity.”