The first public bond in the world that has been created and run using distributed ledger has been evaluated at $73.16 million (A$100 million) by the World Bank as they recognize its potential to revolutionize the industry.
The Australian Commonwealth Bank, selected by the World Bank as the only issuer in early August, said that the transfer of the bond will be made on August 28, Reuters reports.
The two-year bond dubbed "Bondi" with a rate of 2.2% is the World Bank's first step towards the blockchain utilization as an auxiliary mechanism for automating the emission process with several participants.
The platform, which will be used for issuing bonds, is developed by the Commonwealth Bank’s own blockchain laboratory, that expects to use a distributed ledger in order to improve the efficiency of bond transfer between buyers, sellers, and banks.
In today's report, Commonwealth Bank also noted that this issue of emission will be the first such experiment involving public funds, while other similar projects operate in closed conditions.
WHY IS IT IMPORTANT?
Why it is important
- The deal will be implemented as a part of World Bank’s broader program to address the problems of poverty and global market stability, during which the bonds are sold for $50-60 billion a year.
- Blockchain technology has the potential to optimize the processes occurring between numerous intermediaries and agents of the debt capital market. It can help to simplify the attraction of capital and trade in securities, improve efficiency and strengthen regulatory oversight.