CBA partners with World Bank on blockchain bond issue

August 10, 2018
Chris Wheal

The Commonwealth Bank of Australia (CBA) is to pioneer a bond issue that will be created and run using only blockchain technology in a bid to simplify capital raising.

Commonwealth Bank partners with World Bank on world’s first blockchain bond issue

Partnered by the World Bank, CBA will launch the first bond ever to be “created, allocated, transferred and managed using blockchain technology.

Kangaroo bond

CBA said on Friday it had seen strong indicative interest in the so-called Aussie Kangaroo bond, or more officially, the Blockchain Offered New Debt Instrument, an acronym whimsically created to spell “bond-i” – a reference to the iconic Sydney beach.

The development of the bond will use a private Ethereum blockchain, although CBA said it remained open to alternatives in the “rapidly” expanding blockchain sector.

Consulting with Microsoft, which conducted an independent review of the platform’s security and access, CBA’s manager of institutional banking and markets, said: “We take a collaborative approach to innovating and have a track record of partnering with other leading financial institutions, government bodies and corporates to innovate through blockchain.”

He added: “We believe that this transaction will be ground-breaking as a demonstration of how blockchain technology can act as a facilitating platform for different participants.”

Blockchain credentials

CBA has been among the most active of the world’s banks in developing blockchain projects. Last month it completed a supply-chain experiment that involved a shipment of almond nuts from Australia to Germany using blockchain’s distributed ledger technology.

The World Bank, meanwhile, is more than experienced in bond issues, selling between $50bn-60bn in debt a year for sustainable global development.

Its treasurer Arunma Oteh said: “I am delighted that after a year of working with Commonwealth Bank of Australia, we are in a position to launch our first blockchain bond transaction. Microsoft’s experience and support have also been instrumental to achieving this historic milestone.”

Streamlining processes

All parties believe that blockchain has the potential to streamline processes for raising capital and trading securities, given the growing number of interconnected intermediaries in the capital markets.

Sophie Gilder, head of blockchain innovation labs at CBA, said: “We know blockchain has the potential to revolutionise financial services and markets, and this transaction is a significant step towards that future state.

“This project further solidifies CBA’s position at the forefront of blockchain technology and we are excited to build on this, in partnership with our clients.”

Post written by Chris Wheal
Chris Wheal is editor of OpenLedger's news and features service. An award-wining business journalists himself, he runs a team of freelance journalists from across the UK and north America.

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