The World Bank has launched the first-ever blockchain bond. In a press release, the Bank announced that it had hired the Commonwealth Bank of Australia (CBA) to manage the bond. The statement detailed that the new debt instrument will be “created, allocated, transferred and managed through its life cycle using distributed ledger technology.”
According to the details of the press release, the deal is worth A$100 million. The exercise is designed to test how the distributed ledger technology might be leveraged to improve the currently antiquated bond sales process. Per the statement, the CBA has said that the two-year bonds had priced to yield 2.251% and would settle Aug. 28.”
Streamlining the bond issuance and transaction process
Further, the statement details that the bond is the first step in “moving bond sales away from manual processes towards faster and cheaper automation.” Dubbed the Blockchain Operated New Debt Instrument (“Bondi”), the deal is a prototype.
The backers of blockchain technology are positive, and according to reports, crypto fanatics are confident that using the blockchain will streamline the bond issuance and transaction process and improve transparency, and they say there is already significant interest among investors.
A milestone for the World Bank
The World Bank is of course a major financial player in the world and it helps change the outlook of the financial sector. Its bonds carry a AAA rating. The World Bank can help collapse the traditional bond issuance process into an instantaneous process. Normally, the process is long and cumbersome with a long paper trail.
The choice of Australia is another strong point that will catapult the distributed ledger technology to mainstream use. The country has sufficient financial infrastructure in place that can help streamline the adoption of blockchain.
In addition, Australia is very blockchain friendly. Recently, it was reported that the country’s securities exchange (ASE) plans to adopt blockchain in processing equities. With the entrant of the World Bank in the blockchain space, the technology may get the big break it needs.