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Abu Dhabi, UAESaturday 17 November 2018

World Bank hires Commonwealth Bank of Australia to issue first global blockchain bond 

The new debt instrument named bond-i will be created and managed with distributed ledger technology

World Bank mandates Commonwealth Bank of Australia to issue first global blockchain bond. Photographer: Akos Stiller/Bloomberg
World Bank mandates Commonwealth Bank of Australia to issue first global blockchain bond. Photographer: Akos Stiller/Bloomberg

The World Bank has appointed Commonwealth Bank of Australia to issue the first global blockchain bond intended to simplify raising capital and trading securities.

CBA was selected sole arranger for the first bond to be created, allocated, transferred and managed using blockchain technology, the World Bank said in a statement on Friday. Indicative investor interest in the blockchain operated new debt instrument, or bond-i for short after Australia's famous beach, was "strong."

"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 as we strive to achieve the Sustainable Development Goals, ” Denis Robitaille, World Bank group chief information officer, said.

The financial services industry is increasingly taking blockchain technology seriously. The industry spends about $1.7 billion per year on blockchain as banks and other financial institutions start to move beyond the proof-of-concept stage and begin rolling out commercial distributed ledger technology, according to US-based research firm Greenwich Associates said in a report in June.

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The World Bank and CBA did not provide details on the size or date for the issuance, but said it would be launched after a period of consultation with more investors. Once launched, the bond will be available on a blockchain platform run by the World bank and CBA.

The World Bank issues between $50 billion to $60 billion annually in bonds for sustainable development in emerging countries.

Blockchain technology can simplify processes among numerous debt capital market intermediaries and agents, the World Bank said. It can help simplify raising capital and trading securities, improve operational efficiency and enhance regulatory oversight.

World Bank infrastructure for the bond will run in Washington, D.C. on the Microsoft Azure cloud computing platform, CBA said.

Law firm King & Wood Mallesons acted as deal counsel on the bond issue and advised on the legal framework for its implementation.