World Bank Offers Its First Blockchain Bond Sale
For the first time, the World Bank is selling a bond to investors using blockchain technology. The bank, which primarily provides loans to countries in need of financing, has tasked Commonwealth Bank of Australia (CBA) with carrying out the bond sale, dubbed “Bondi”, for Blockchain Offered New Debt Instrument, CBA said on its website.
It is the first bond globally to be created, allocated, transferred and managed using blockchain technology, CBA claims.
“Given the transformative role of emerging technologies, we continue to prudently seek opportunities for us to meet investor needs as well as the needs of our clients,” World Bank treasurer Arunma Oteh was quoted as saying in the announcement.
The World Bank further characterized investor interest in the new bond as “strong,” adding that they are aiming to raise approximately AUD 100 million (USD 73 million) from the sale, the Financial Times added. According to the newspaper, the use of blockchain technology in bond sales has the potential to reduce the time it takes to settle such securities from currently five days to “a few seconds.”
Paul Snaith, manager of treasury assets and liability operations at the World Bank, was quoted by the newspaper as saying “we expect to see other issuers come to market soon. Already some central banks are assessing how they can use blockchain for settling transactions.”
Following previous reporting, it appears that the World Bank is taking the classic government approach to blockchain of saying yes to the technology, but no to cryptocurrencies. In the past, the World Bank president Jim Yong Kim has even gone as far as to refer to cryptocurrencies as “Ponzi schemes.”
Cryptonews.com has previously reported that the Thailand Bond Market Association is also looking into issuing bonds using blockchain technology. The Thai self-regulatory organization reportedly believes a new type of blockchain-based bond could speed up the current operational process from 7-10 days to 1-3 days in the near future.
Meanwhile, Sberbank CIB, a subsidiary of Russian banking giant Sberbank, said in May it has successfully conducted Russia’s first ever blockchain-powered commercial bond transaction, in conjunction with the central National Settlement Depository (NSD).