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World Bank's Blockchain Bond Experiment Raises $81 Million

The World Bank has published more details about its blockchain-based bond to be settled next week, including sharing the investors in the process.

As previously reported by CoinDesk, Australia’s Commonwealth Bank (CommBank) intends to settle the bond, dubbed bond-i (for blockchain operated new debt instrument), on Tuesday, marking the first time the World Bank settles a blockchain bond. While the bank originally reported it would settle $100 million AUD ($73 million U.S.), it reported Friday that it had raised as much as $110 million AUD (roughly $81 million U.S.).

The bond’s investors include CommBank, QBE Insurance, First State Super, NSW Treasury Corporation, SAFA, the Treasury Corporation of Victoria and Northern Trust, according to a release.

CommBank is using a private ethereum blockchain for bond-i, a bank press release said earlier this month. Microsoft has reviewed the platform’s architecture and security.

World Bank treasurer Arunma Oteh said in a statement on Friday that the organization welcomes “the huge interest that this transaction has generated from various stakeholders.”

She added:

“I am delighted that this pioneer bond transaction using the distributed ledger technology, bond-i, was extremely well received by investors. We are particularly impressed with the breath of interest from official institutions, fund managers, government institutions, and banks. We were no doubt successful in moving from concept to reality because these high-quality investors understood the value of leveraging technology for innovation in capital markets.”

The organization will continue to look into how capital markets can become more secure, she said.

Coupons on the bond can be paid on February and August 28 in 2019 and 2020, the release noted. It offers a 2.2 percent return over two years, with a 2.251 percent semi-annual re-offer yield.

World Bank HQ image via Andriy Blokhin / Shutterstock

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The World Bank Is About to Settle a Blockchain Bond Worth $73 Million

The World Bank is expected to settle its first blockchain-based bond worth $73 million this month.

Australia’s Commonwealth Bank (CommBank), which was selected as the sole arranger of the issuance by the World Bank early in August, said the bond is to be transacted on Aug. 28, as reported by Reuters on Thursday.

Engineered to bring a 2.2 percent return, the two-year bond – dubbed “Bondi” – is the first exploration by the World Bank into using blockchain as the supporting technology for automating the issuance process among multiple parties.

As CoinDesk has reported, the platform to be used for the issuance was developed by CommBank’s in-house blockchain lab and will use a distributed network to hopefully improve efficiency for bond transactions between sellers, buyers and banks.

CommBank further claimed in today’s report that the issuance will be the world’s first to use blockchain to raise money from public investors, in contrast to similar ongoing projects that are tested in private markets.

The deal will be made as part of the $50–$60 billion in bond sales every year issued by the World Bank in a bid to combat poverty and improve sustainability for worldwide markets.

World Bank Group image via Victorgrigas/Wikipedia

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World Bank Taps Australia's CommBank to Issue Its First Blockchain Bond

The World Bank Group has partnered with the Commonwealth Bank of Australia (CBA) to issue a bond using blockchain.

The CBA, one of the “Big Four” commercial banks in Australia, said in a release on Friday that it had won a mandate from the World Bank to arrange the issuance of the bond, which will be created, transferred and managed via a blockchain platform.

The technology, already developed by CBA’s in-house blockchain lab, aims to have key parties in a bond issuance process such as investors and banks to be participating nodes in a distributed network. In this way, capital for the bond can be raised and transacted more efficiently.

Called bond-i, the debt issuance sees input from investors including Northern Trust, QBE Insurance and Treasury Corporation of Victoria.

World Bank’s treasurer Arunma Oteh said in the release that the technology is in the position for the launch after a year of working with the CBA. That said, the issuance timeline and size of the bond remain unknown at this stage.

According to the release, the World Bank issues $50 to $60 billion in bonds every year as part of its mandate to reduce poverty and improve sustainability for worldwide markets.

World Bank’s chief information officer Denis Robitaille commented in the release:

“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.”

The CBA, which designed and developed the technology, said it is a private blockchain on top of the ethereum network and had also been reviewed by Microsoft regarding the platform’s architecture, security, and resilience.

The announcement follows news in December 2017 that the CBA was developing a blockchain system for bond issuance in collaboration with a “major world issuer,” whose name was not disclosed at the time.

Currently, several major financial institutions in the world, such as JP Morgan, the Agricultural Bank of China, and BBVA, have already tested blockchain-based systems for bond and loan issuance.

World Bank image via Shutterstock

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Commonwealth Bank Claims Success in Global Trade Blockchain Test

The Commonwealth Bank of Australia (CBA) has announced the completion of a cross-border shipment that utilized blockchain to track goods in the supply chain.

The multinational giant and also one of Australia’s ‘Big Four’ banks said in a statement on Monday that some 37,000 pounds of almonds were shipped from Australia to Germany and were tracked via a private blockchain platform developed by the bank on top of the ethereum network.

Participating nodes of the blockchain system included key parties along the supply chain such as agriculture producer Olam Orchards, logistic carriers as well as port operator Patrick Terminals and Port of Melbourne.

The CBA said the blockchain-based system stores data of containers, documents and financial transactions on a distributed network. As such, different partners can view and track information about the shipment in real-time and simultaneously, such as the shipment’s status as well as the temperature and humidity of the containers.

“This level of data provided partners in the supply chain with a greater level of transparency and efficiency regarding the location, condition and authentication of the goods being transported,” the bank said in the release.

Olam Orchards’ supply chain manager Emma Roberts commented in the announcement:

“Trade inefficiency can be extremely detrimental to our business. It is vital that as an industry, we look at emerging technology for ways to enhance the supply chain to develop a more transparent and efficient platform.”

The news follows the banking giant’s previous work to test a blockchain system for tracking cross-border shipments of cotton in real-time through a partnership with Wells Fargo. Last year, the CBA also revealed a plan to issue a bond over a blockchain system.

The bank’s overall effort to adopt blockchain is part of its wider push for technology advancement. In early 2017, the CBA said it aimed to spend close to $1 billion on technology development in 2017, including a continuous investment on blockchain.

Almond image via Shutterstock

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Australia's CommBank Plans to Issue a Bond on the Blockchain

The Commonwealth Bank of Australia has revealed a plan to issue a bond over a blockchain system, possibly as soon as next year.

Though few details were revealed, Sophie Gilder, CommBank’s head of blockchain, said that the bond would be transferred and paid for over a blockchain-based system in collaboration with an unnamed major world issuer, according to ZDNet report.

In comments made during the GMIC Sydney conference Tuesday, Gilder said that bank has been exploring blockchain use cases for more than four years and has completed 25 proofs-of-concept and trials, aimed to address real-world business issues.

CommBank, she continued, is eyeing the technology for equities, bonds, syndicated loans and other applications where it considers there are high levels of “friction.”

Gilder stated:

“We think the platform we have built can make this more efficient.”

Earlier this year, as reported by CoinDesk, CommBank announced that it is developing a blockchain-based system for the sale of government bonds. The concept was tested by the Queensland Treasury Corporation, which acts as the Australian state’s central financing authority.

Other institutions are also moving to adopt blockchain technology for bond issuance.

This October, Russia’s National Securities Depository said it had issued its first-ever live bond using blockchain. The financial instrument, a $10-million bond for shares in Russian telecom giant MegaFon, used smart contracts and the open-source Hyperledger Fabric blockchain.

And, in late 2016, French bank BNP also announced that it was exploring the technology for use in distributing instruments known as “mini-bonds.”

Commonwealth Bank image via Shutterstock

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