The World Bank is gearing up for the world’s first, blockchain bond. It has mandated the Commonwealth Bank of Australia (CBA) to arrange the same. This bond has been named as bond-i, an acronym that stands for Blockchain Offered New Debt Instrument. The name also bears a reference to Bondi Beach, an iconic spot in Sydney. Foreign bonds, issued in Australia, in the local currency are otherwise known as the Kangaroo bond.
It will be the world’s first bond to be created, transferred, managed, and allocated using blockchain technology, the institution said. The blockchain technology, which underpins cryptocurrencies like Bitcoin, refers to the distributed ledger technology. This technology is known for securely recording all transactions that are made on the chain.
A joint press release from both the organizations stated that blockchain has the potential to streamline processes amongst various agents and debt capital market intermediaries. It can help to simplify trading securities and raising capital. Apart from this it can enhance regulatory oversight and improve operational efficiencies. This blockchain bond will be issued and distributed on a blockchain platform operated by World Bank and CBA.
Presently a private Ethereum-based blockchain is being used for the project. This is done as it has the required capabilities. CBA, however, said that it is open to other options in the near future as this space develops.
Meanwhile, the World Bank mentioned that investor interest in this blockchain bond so far has been quite intense. It intends to launch the transaction after wider consultation with more investors together with CBA, as stated in the CNBC report. According to blockchain technology experts, it makes the processes more secure and faster. However, some of them are worried that in the midst of all this hype surrounding the technology’s potential, it may potentially lead to a bubble.
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