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World Bank Has Now Issued $108 Million Worth of Blockchain Bonds
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As of mid-August 2019, the World Bank announced a second iteration of its blockchain bond issuance, bringing the total amount issued to $108 million (USD). The bonds have been created and managed through the use of blockchain technology, which will soon be used in the areas of settlement, custody, and regulatory compliance.
The World Bank’s Blockchain Bonds Explained
The World Bank recently raised $33.8 million (USD) in its second round of issuing blockchain bonds.
The deal entailed the sale of a “blockchain-operated debt instrument” (bond-i) per the Commonwealth Bank of Australia (CommBank), which jointly oversaw the sale with RBC Capital Markets and TD Securities.
This brings the total value of World Bank-issued blockchain bonds to $108 million (USD). The bonds utilize a private version of the Ethereum blockchain.
CommBank says the move entails “the first bond created, allocated, transferred and managed through its life-cycle using distributed ledger technology”.
According to Andrea Dore, the World Bank’s head of funding,
“We are happy to see the continued, strong support and collaboration from investors and partners. The World Bank’s innovation and experience in the capital markets is key to working with our member countries to increase digitization to boost productivity in their economies and accelerate progress towards the Sustainable Development Goals.”
Sophie Gilder, head of blockchain and AI at CommBank, discussed the benefits that blockchain technology brings to bonds:
“CBA now has tangible evidence from our first bond offering using blockchain technology and subsequent bond management, secondary trading and tap issue via the same platform, that blockchain technology can deliver a new level of efficiency, transparency and risk management capability versus the existing market infrastructure.”
Gilder says the next step will entail leveraging blockchain technology in the areas of settlement, custody, and regulatory compliance.
The World Bank isn’t the only financial institution to integrate the emerging technology with bond issuance.
Earlier this year, French investment banking giant Societe Generale issued a €100 million covered bond as a security token on Ethereum.
In addition to bonds, security tokens have been implemented in regulated real-world assets to include equity, investment funds, real estate, and even fine art.
What do you think about the World Bank issuing a total of $108 million worth of blockchain bonds? We’d like to know what you think in the comments section below.
Image courtesy of the World Bank.
Tim Fries
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
