The proceeds generated after the bond issuance will go towards supporting World Bank’s sustainable development projects in emerging economies.
The World Bank is preparing to conduct the world’s first bond transaction using ethereum blockchain platform. The initiative will show the possibilities of the blockchain technology and how it can be used to make bond trading more quick and efficient, Reuters reports.
According to the Commonwealth Bank of Australia (CBA), which was chosen to deliver the bond, the transaction is planned to be settled on Tuesday, August 28. The bond, called Bondi-i, is expected to raise from $50 to $100 million in Australian dollars and will be issued for a two-year period.
“You’re collapsing a traditional bond issuance from a manual bookbuild process and allocation process, an extended settlement then a registrar and a custodian, into something that could happen online instantaneously,” James Wall, executive general manager at CBA, earlier told Reuters.
The name Bond-i is the abbreviation for Blockchain Offered New Debt Instrument and is also a reference to the popular Bondi beach in Australia. The World Bank’s innovation lab in partnership the Commonwealth Bank of Australia has been working on the project for almost a year.
Bond-i will be issued on a blockchain platform that runs on a private ethereum network, which will be operated by the CBA in Sydney and the World Bank in Washington. They also partnered with tech giant Microsoft, which will be responsible for handling the technological framework of the bond issuance in the public offering. Other partners that took part in the initiative include Northern Trust, the Treasury Corporation of Victoria, QBE, and legal company King & Wood Mallesons, which advised on the legal framework for the project.
The money raised from the new blockchain bond will go on projects run by the World Bank’s Reconstruction and Development division. With an aim of facilitating progress in emerging countries, the bank annually issues $50–$60 billion of bonds. The division is committed to reduce poverty and drive sustainable growth in low-income economies by delivering financial services like loans, risk management products, guarantees, and policy advice.
Earlier this year, Russian bank Sberbank and telecoms company MTS conducted the country’s first commercial bond transaction on the blockchain platform. Still, the deal, worth $11.20 million, was offered via private placement. As for World Bank’s bond, it’s the first time the funds are raised from public investors through a legal blockchain bond issuance.
A few weeks ago, CBA conducted an experiment showing that the blockchain technology can be used to transform the future of global trade. Thanks to a partnership with five domestic and international supply chain leaders, the bank successfully delivered 17 tons of almonds from Australia to Hamburg, Germany.
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