As announced on Wednesday, May 15, the World Bank and the Commonwealth Bank of Australia (CommBank) had a successful recording of a secondary transaction for bond-i. Bond-i is a blockchain-operated debt instrument, on a distributed ledger it shows the high capabilities of the technology and connotes the first bond to have both issuance and trading recorded on a blockchain platform.
The institutions had joined forces to enable recording of secondary market bond trading using blockchain tech and have been able to work it out. CommBank had first revealed in 2017 that they had a plan to issue a bond over a blockchain system and hinted it was in collaborative work with an unnamed “major world issuer.” The Bond-i initiative was then issued in August 2018 by the World Bank and the CommBank was the sole arranger in line with the prior reveal. At the time, their experiment had helped the World Bank raise $81 million.
CommBank’s Blockchain Centre of Excellence on top of the Ethereum network built and developed the blockchain platform used in this successful recording. The design was also reviewed by Microsoft as regards architecture, security, and resilience. This secondary trading is a huge advancement in capital markets as the technology involved will enhance an all-around smoothness in transactions. Jingdong Hua, World Bank vice president, and treasurer 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.” A comment by CommBank’s Innovation Labs’ head of experimentation & commercialization, Sophie Gilder, “Blockchain has the potential to streamline processes for raising capital and trading securities, improve operational efficiencies, and enhance regulatory oversight.”
Santander, Societe Generale and Abu Dhabi-headquartered Al Hilal Bank and possibly other financial institutions around the world have been recently testing blockchain-based systems for bond issuance as well. This could mean a new dimension of blockchain use for financial institutions in general.
Credits- Yogita Khatri
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