The World Bank (aka International Bank for Reconstruction and Development) has instructed the Commonwealth Bank of Australia (CBA) to arrange for the first global bond to be created, allocated, transferred and managed using blockchain technology.
Denominated in Australian Dollars, the Kangaroo bond, catchily termed ‘bond-i’ – standing for Blockchain Offered New Debt Instrument, a tongue-in-cheek play-on-words in reference to Australia’s most famous beach – will be issued and distributed on a blockchain platform operated by the World Bank in Washington and the CBA in Sydney.
ETHEREUM “FIRST CHOICE”
Ethereum has been chosen as the blockchain for the project as the CBA believes it “…currently has the largest and most active development community globally, and offers the functionality we require.”
Following the decision, the Bank state an independent review of the CBA blockchain platform’s architecture, security and resilience will be conducted by Microsoft.
Although Ethereum is to be utilised for this first ever issuance, the CBA is fully aware “…other blockchains are developing rapidly and CBA remains open to other options in the future.”
The CBA has been one of the most visibly active banks in the blockchain space and Sophie Gilder, Head of Blockchain, Innovation Labs, 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.”
The World Bank was founded after the second world war and is responsible for issuing between US$50-US$60 billion annually in bonds “as part of its mandate to reduce poverty and promote lasting development.”
However, many, including former World Bank attorney and whistle blower Karen Hudes, have questioned the organisation’s ability to reduce poverty by issuing bonds that increase debt burdens on countries in the absence of policies that help stimulate economic growth.