The World Bank has announced that it has partnered up with the Commonwealth Bank to enable secondary market trading on the blockchain for its bond-i. This makes it a world first as the bond is both issued and traded via the use of distributed ledger technologies.
In a press release on the World Bank website, the two entities announced the successful completion of a secondary transaction that recorded its trading activity on a distributed ledger. The press release described this as illustrating the vast potential of being able to enhance the coordination of securities trading and management over the blockchain by delivering a “verified, permanent record, and instant reconciliation”.
The World Bank first issued its bond-i back in August 2018 which was the first bond in the world to be created, allocated, transferred and managed through its entire lifecycle, via DLT.
Founded in 1944 the World Bank is an international organisation that operates as a global cooperative owned by 189 countries. They provide loans, risk management products, guarantees, and advisory to support the Sustainable Development Goals. They also aim to reduce extreme poverty and to promote shared prosperity. The Bank has been issuing bonds to capital markets for over 70 years which have been used to fund programmes designed to bring about a positive impact.
World Bank Vice President 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.”
According to Sophie Gilder, the Head of Experimentation and Commercialisation at CBA who were the sole arranger for the bond, the new development speaks to the innovation and commitment of all involved, including investors.
“There is a growing recognition that blockchain technology can deliver a superior digital market for raising capital and then managing and trading securities, so we are working with our strategic partners to realise that vision. Blockchain has the potential to streamline processes for raising capital and trading securities, improve operational efficiencies, and enhance regulatory oversight.”she said.
The bond-i blockchain was developed and built by CBA and is a part of a bigger strategic focus to “harness the potential of disruptive technologies for development”, according to the World Bank website.
The project is expected to continue expanding and improving based on the continued feedback from investors and other capital market partners.