A collaboration between the Commonwealth Bank of Australia (CBA) and the World Bank has resulted in an exciting new project – the world’s first blockchain bond.
While the Reserve Bank of Australia is not banking on Bitcoin, the country continues to showcase its willingness to embrace blockchain technology and all of the benefits that go along with it.
The latest move in that direction is not coming from some start-up hoping to spread global adoption, but rather from the World Bank who has instructed Australia’s Commonwealth Bank (CBA) to create and issue the world’s first blockchain bond.
Partnership Sets a Blockchain Precedent
According to CBA’s website, the Blockchain Offered New Debt Instrument, aptly abbreviated to bond-i, will be “created, allocated, transferred and managed using blockchain technology” on a private Ethereum blockchain. Tech giant, Microsoft, has also been involved in the initiative as an independent reviewer of the bond-i.
The project combines the expertise of CBA’s Blockchain Centre of Excellence and the World Bank, a partnership which James Wall believes will be an industry gamechanger. Wall, the Executive General Manager of Institutional Banking & Markets International at CBA, said:
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. We believe that this transaction will be groundbreaking as a demonstration of how blockchain technology can act as a facilitating platform for different participants.
Wall explained how it’s not only financial institutions that will benefit from blockchain:
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.
An Important Tool in Combating Poverty
Reducing poverty has been an essential part of the World Bank’s vision. A testament to this is the fact that it issues between US$50-US$60 billion in bonds every year in a bid to encourage economic sustainability. A key component of this seems to be disruptive technology, like blockchain. Denis Robitaille, who is the World Bank Group Chief Information Officer, said:
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 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.
More Than Just a Supporting Technology
Blockchain technology has come into the light as a beacon of hope for a more streamlined and efficient way of doing transactions and storing records. The fact that the data stored is immutable and traceable makes it an ideal tool for banks and other organizations offering financial services.
Sophie Gilder, Head of Blockchain, Innovation Labs, CBA
We know blockchain has the potential to revolutionise financial services and markets, and this transaction is a significant step towards that future state. 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.
There is no confirmed date for the launch of the bond-i but once it has been introduced, it will be distributed on a blockchain platform duly run by the World Bank and the CBA.
Do you think that more major banks will be following in CBA’s footsteps? Let us know in the comments below!
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