The World Bank has priced the world’s first public bond created and managed using only blockchain in a $100 million ($73.16 million) deal designed to test how the technology might improve decades-old bond sales practices.
The Commonwealth Bank of Australia is the sole arranger of the prototype deal, dubbed a “Bondi” bond which stands for Blockchain Operated New Debt Instrument, as well as a reference to the famous Australian beach. It is hoped that this will serve as an initial step in moving bond sales away from manual processes towards faster and cheaper automation.
The World Bank is an international financial institution which issues between US$50-US$60 billion annually in bonds for sustainable development. It has drawn considerable criticism in the development community, particular for its governance structures and loan conditionalities.
The World Banks says blockchain has the potential to streamline processes among numerous debt capital market intermediaries and agents, thereby facilitating capital-raising, improving operational efficiencies and enhancing regulatory oversight. It has been suggested that the relatively modest size of the issue coupled with the Australian market's transparency and limited investor base renders the bond an experiment for observers to assess the practicality and viability of this technology.
Could blockchain become a more efficient means of issuing, allocating and managing bonds? Is this a watershed moment for the technology? Does the fact that innovation is being driven by established financial players, like the World Bank, further signal that blockchain’s revolutionary aspirations have been usurped so that the technology is merely another platform for financial services?