The World Bank has launched a decentralised bond
Despite the news that the SEC refused nine different Bitcoin ETF applications in one go, there has been a bit of a boost for the blockchain industry.
The World Bank announced the launch of a blockchain-bond that uses the technology from start to finish. The bond-I, which stands for “blockchain operated new debt instrument” is a two-year bond that was created in collaboration between the Commonwealth Bank of Australia and the World Bank.
Investors in the project include several leading Australian banks and state treasuries as well as entities such as King & Wood Mallesons, Mark-it, Microsoft, and Toronto Dominion Securities. The World Bank has said that the bond is the first of its type and will create, allocate, transfer, and manage all aspects of its life-cycle using blockchain technology.
Whilst it claims to be a world first, there are actually some examples of smaller companies issuing bonds using cryptocurrency and the Ethereum blockchain. One such experiment was conducted in the UK and the Russian telecoms firm MTS has placed private bonds on the blockchain in collaboration with Sberbank back in May.
A spokesman for The World Bank said in a statement that the i-bond is the first bond of its type that is offered to a public and global range of investors. They added that the bond is unique in that the entire bond process, from creation to allocation, is carried out on and over the blockchain. It is also worth considering that the scale of the i-bond is considerably larger than any private blockchain bond offerings that have come before it.
The World Bank has often led the way when it comes to pioneering bonds as they launched the first globally traded and settled bond back in 1989, followed by the first electronic bond in 2000.
“We welcome the huge interest that this transaction has generated from various stakeholders and will continue to seek ways to leverage emerging technologies to make capital markets more secure and efficient,” the World Bank’s Oteh said.
“But don’t expect the World Bank to jump on the cryptocurrency bandwagon just yet.” Its president, Jim Yong Kim, said earlier this year that while it is investigating using cryptocurrencies, “I’m told the vast majority of cryptocurrencies are basically Ponzi schemes.”