The Commonwealth Bank of Australia (CBA) was mandated by the World Bank as arranger for a two-year bond which has raised A$110 million using blockchain. Named bond-i, the title is the world’s first bond to be created, allocated, transferred and managed through its lifecycle using the disruptive technology.
Following a two-week consultation period with the market, CBA welcomed a number of investors including First State Super, NSW Treasury Corporation, Northern Trust, QBE, SAFA, Treasury Corporation of Victoria, as well as CBA.
James Wall, Executive General Manager of IB&M International, CBA said:
“Since announcing the mandate, the interest we’ve received for bond-i has been overwhelming. It is clear the market is ready and open to the uptake of emerging technologies and sees the potential evolution of the capital markets. It has been a pleasure to work on such a ground-breaking transaction with a forward-thinking organization like the World Bank.”
The Blockchain Innovation Lab launched by the World Bank in June 2017 aimed to understand the impact of distributed ledger technology in areas such as land administration, supply chain management, health, education, cross-border payments, and carbon market trading.
Arunma Oteh, World Bank Treasurer, commented:
“I am delighted that this pioneer bond transaction using the distributed ledger technology, bond-i, was extremely well received by investors. We are particularly impressed with the breath of interest from official institutions, fund managers, government institutions, and banks. We were no doubt successful in moving from concept to reality because these high-quality investors understood the value of leveraging technology for innovation in capital markets.”
“We welcome the huge interest that this transaction has generated from various stakeholders and will continue to seek ways to leverage emerging technologies to make capital markets more secure and efficient”, Oteh added.
The bond-i blockchain platform was built and developed by the CBA Blockchain Centre of Excellence, housed in the Sydney Innovation Lab. The Australian Securities Exchange is planning to switch to blockchain technology between 2020 and 2021.
“We believe there is untapped potential for the application of this product to capital markets and are pleased to be involved as an early investor”, said Derek Yung, COO of Group Investments, QBE Insurance Group Limited. “The opportunity to be involved in innovation like this is a privilege, and both CBA and the World Bank Treasury team are to be congratulated in their leadership in this space”, commented William Whitford, Managing Director, Treasury Corporation of Victoria.
The banking industry has been recently testing blockchain for remittance pursposes, including Banco Santander, and HSBC-ING Bank partnership to execute a live trade finance transaction for international food and agriculture conglomerate Cargill using R3’s Corda scalable blockchain platform.