World’s First Blockchain Bond
Termed the world’s first bond “created, allocated and managed using blockchain technology,” the CBA holds the distinction of being selected by the World Bank to pilot the enterprising project.
Retaining a sense of humor particular to Australians, the so-called “Kangaroo Bond” is classified as a “bond-i,” standing for Blockchain-Offered New Debt Instrument, and is wholly denominated in Australian Dollars. In addition, the bond is based on the Ethereum protocol and hosted on Microsoft’s Azure, a cloud storage service.
Bond issuance forms a large part of the World Bank, a global non-profit organization working towards mitigating health risks, diseases, and poverty in the developing world. As per estimates, over $60 million is deployed via bonds each year as part of the bank promoting and developing a sustainable, technology-driven ecosystem.
Paul Snaith from the World Bank treasury acknowledged the advantage of using blockchain technology in such a setting, highlighting its immutability, transactional speed, and instantaneous update features.
“That is the fundamental difference: if you have a trusted record, there is no need for every participant to have their own copy of their position. If everybody trusts the ledger, all we need to do is point to it to know and report our positions.”
Institutions Finding Relevance in Blockchain
Three institutional parties have confirmed their interest in the blockchain-issued bond, namely QBE, Northern Trust, and the Treasury Corporation of Victoria. The bond is expected to be distributed at the World Bank headquarters in Washington, D.C. and the CBA in Sydney.
CBA executives seem elated about implementing the technology within their existing frameworks. James Wall, CBA general manager of institutional banking, believes a successful demonstration of bond issuing on the blockchain will prove the technology’s prowess in acting as a “facilitating platform for different participants.”
Meanwhile, Sophie Gilder, head of blockchain technology at CBA, ascertains that the move serves to define a broader part of the financial market of the future: one where capital markets are operated using the distributed ledger framework.
CBA’s Blockchain Push
As reported by BTCManager in July 2018, the CBA was one of the participants in a cross-border, blockchain-enabled logistics effort which saw 17 tons of almonds shipped from Victoria, Australia to Hamburg, Germany.
Additionally, in 2017, Australia’s so-called “big four” banks revealed that Queensland Treasury Corporation had issued a “virtual crypto-bond” using the banks’ private blockchain program.