By Reuter’s has reported that the World Bank and the Commonwealth Bank of Australia (CBA), which is Australia’s largest bank, have made a public bond available through the exclusive use of blockchain technology. The official mandate for the project was revealed by the World Bank, on August 10th. The CBA has been reported to be the responsible for creating, allocating, transferring and managing the first bond through the use of blockchain technology. This application of blockchain technology is said to be the first of its kind.
The CBA has released a statement that explains that the A$100 million ($73.16 million) deal will entail a two-year bond. The bond will be settled August 28th and have been priced to yield a 2.251 percent return on investment.
The prototype was dubbed “Bondi”, an acronym for Blockchain Operated New Debt Instrument, and a pun on Australia’s world-renowned beach. The prototype is presently being acknowledged as a technological revolution, for the automation of decades-old bond insurance and sales practices. Reuters has cited the CBA executive general manager, James Wall, in saying that:
“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.”
According to the creditworthiness rating system, an AAA rating is the highest possible rank. Reuter has noted that the World Bank bonds have an AAA rating. As a means to foster economic progress in developing countries, the World Bank allegedly issues between $50 and $60 billion in bonds annually.
Sberbank CIB is the corporate and investment banking division of Russia’s largest bank, Sberbank. In May 2018, Sberbank CIB has conducted the first blockchain-based commercial bond transaction in Russia.
Mobile TeleSystems (MTS), a leading, local telecoms firm in Russia and the National Settlement Depository (NSD) were partners in the transaction with Sberbank CIB. The partnership involved the smart-contract, which enabled the issuance of MTS corporate bonds at the value of RUB 750 billion ($12 million), with a 6-month maturity.
Significant initiatives are underway in Australia. The initiatives pertain to the integration of blockchain and artificial intelligence (AI), across both the government and the financial sector, in addition to the plans to recognize Bitcoin as a legal, national or local currency. The Australian government has allocated substantial funds for blockchain research to continue its digital transformation and to focus on citizen security. In July this year, IBM signed a five-year AU$1 billion ($740 million) contract with the Australian government. This deal includes the use of blockchain and other top-end technologies, to improve the data security and automation of federal departments, such as that of the department of defense and the department of home affairs.
The Australian Securities Exchange (ASX) has been working on the replacement of their current system with blockchain technology, since December 2017. The rationale is to implement blockchain technology as a means to process equity transactions. According to Reuters, the process is projected by the ASX to be finished by 2020.
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