The World Bank and the Commonwealth Bank (CBA) announced that they have enabled secondary market trading, that has been recorded on blockchain called bond-i, on Wednesday. Bondi-i, stands for blockchain operated new debt instrument, is the first bond whose issuance and trading have been recorded on the blockchain.
A press release issued by the World Bank, stated that bondi-i, was issued by the body in August 2018, and was the world’s first bond to be created, allocated, transferred and managed through its life cycle using distributed ledger technology. CBA was the sole arranger for the bond.
Speaking on the development, World Bank Vice President and Treasurer Jingdong Hua, said, “Enabling secondary trading recorded on the blockchain is a tremendous step forward towards enabling capital markets to leverage distributed ledger technologies for faster, more efficient, and more secure transactions. It speaks to the innovation and commitment of all our partners, including investors, that we were able to achieve this together.”
While the development is commendable, there are other banks working about to integrate blockchain and bonds. Recently, a leading French bank Societe Generale issued the first covered bond vehicle worth 100 million euros as a security token on the Ethereum blockchain, recently. The home financing bonds ” or “OFH” tokens have been rated AAA by Moody’s and Fitch and have been fully subscribed by Societe Generale.
The operation was a combined effort of teams from Finance, Legal, Compliance and Operations departments of the bank. Interestingly, this was not the bank’s first rush with blockchain. For the past several years, the bank had been involved with several other blockchain projects.
Sophie Gilder, Head of Experimentation & Commercialisation, CBA Innovation Labs, added, “Since issuing bond-i in August last year, the positive feedback and interest from the technology and financial sector community globally has been extraordinary.”
She added, “Blockchain has the potential to streamline processes for raising capital and trading securities, improve operational efficiencies, and enhance regulatory oversight.”
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