Earlier today, a report from Reuters stated that Commonwealth Bank of Australia [CBA], Australia’s largest bank has been given a go-ahead from the World Bank to put in order a cutting-edge bond.
The bond which refers to foreign bonds issued in Australian local currency will be created and run using blockchain technology. It primarily aims at simplifying the raising and trading of capital assets, the report stated.
According to the report, Denis Robitaille [World Bank Chief Information Officer] said in his statement:
“This pioneering bond is a milestone in our efforts to learn how we can advise our client countries on the opportunities and risk that disruptive technologies offer”
Notably, the World Bank and CBA stated that their interest towards linking blockchain technology and debt bonds have been strong.
Moreover, the officials will be calling the bond “bond-i” [acronym standing for Blockchain Offered New Debt Instrument] named after Australia’s iconic Bondi beach in Sydney, cites the report.
This is the first time the World Bank has ventured into blockchain technology. Furthermore, the two banks confirmed in their statement that the bond will be launched after a round of consultation with several other investors.
The banks are yet to confirm on the size and date of launch, the report said.
Additionally, the two banks collectively see distributed ledger technology [DLT] as one of the core technologies associated with blockchain and cryptocurrencies.
A joint release from the two organizations said:
“Blockchain has the potential to streamline processes among numerous debt capital market intermediaries and agents. This can help simplify raising capital and trading securities; improve operational efficiencies; and enhance regulatory oversight,”
Currently, a private Ethereum-based blockchain is in use for the project as it has the necessary capabilities, said CBA. It also stated that they are open to other options in the future as the project develops further, other sources reported.
Emerging economies are backed by the World Bank to help fight poverty. The World Bank’s mission statement includes two goals, it states:
“To end extreme poverty and promote shared prosperity in a sustainable way”
Reportedly, it issues between $50 billion and $60 billion every year in bonds and the bank also provides analysis and advice for developing countries.
In the future, the Australian securities exchange aims to switch from using traditional centralized methods to using distributed ledger technology. The move to push blockchain technology into banking comes from the fact that CBA intends to start settling equities trades from 2020 for cost-cutting, according to Reuters’ report.
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