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The World Bank has tasked the Commonwealth Bank of Australia to administer a global bond envisioned to raise up to 100 million AUD (73 million USD). Dubbed “bond-I” or “Blockchain Offered New Debt Instrument,” the bond is expected to fast-track the international bank’s efforts in raising capital, trading securities, boost regulatory oversight and expand operational efficiencies.
The bond is the first of its kind to be created on a global scale through the blockchain. According to the World Bank, it is the first to be “created, allocated, transferred, and managed” through blockchain technology. According to the bank, there is much interest surrounding this type of bond, it will be launched after consultation with major stakeholders and investors.
The technology? Though there hasn’t been much information concerning how the project will work, especially on a technical level, this isn’t your usual public blockchain where everyone can host or download a node. The World Bank will leverage a private Ethereum-based blockchain to administer the project, with permission rights given to validators. Microsoft’s Azure cloud platform will be the computing infrastructure for the entire program. Though the bank hopes to innovate and use other technologies if deemed fit in the future, for now, Ethereum is the capable infrastructure to handle “bond-I.”
For The World Bank
The World Bank issues between 50 – 60 billion USD bonds annually to fund its sustainable development programs. Since its first bond in 1989, the bank has been innovating with new technologies, which enabled it to issue its first e-bond in 2000. The use of the blockchain will, therefore be the backbone of the bank’s bond issue process in the coming years and will, according to the bank “streamline processes among numerous debt capital market intermediaries and agents.”
The bond-I is, however, not the World Bank’s first move to leveraging the blockchain technology for its global operations. The bank’s president, Kim Jim, in an interview with CNBC in October 2017 said the blockchain is “something everyone is excited about,” the bank considered blockchain as part of its solution for the 2018 “Innovate4Climate” conference held in Frankfurt, Germany. The bank also launched a blockchain lab to boost research into the technology.
For the blockchain ecosystem
As a bank that researches into, supports, and undertakes projects in climate change, poverty reduction, disease control, and other projects on an international scale, using blockchain to issue bonds to support its programmes will not only boost the prowess of the technology, but will also indicate an endorsement of the blockchain on an international scale.