World Banks Raises an Extra $40 Million through its Blockchain Bond
On Monday, August 19,
The World Bank announced that it had managed to raise an extra USD 33.8 through the Kangaroo Bond, which is due on August 2020. This is the first bond in the world that is created, distributed, transferred, and managed on a distributed ledger for the entirety of its lifecycle.
The bond was issued with the help of the Commonwealth Bank of Australia, TD Securities, and RBC Capital Markets. It brought together various market participants, which included offshore investors and the existing investor community that took part in the first bond issuance.
The World Bank first mandated the Commonwealth Bank of Australia to create the bond in August 2018. At the time, the two-year bond managed to raise $110M Australian Dollars. In May 2019, the World Bank and its partners added extra capabilities to the platform. This made it possible to record Secondary Bond Trading on the blockchain. This made it the first bond who trading and issuance are recorded on the distributed ledger.
The second issuance leveraged the success of the platform and managed to raise $160M Australian dollars. It will make it possible for capital markets to leverage the distributed ledger for faster, efficient, and more secure monetary transactions.
Bond-i, which is the World Bank’s Blockchain-operated new debt instrument, is part of a larger focus by the World Bank to utilize new technology to benefit its clients. The global institution established a blockchain lab in 2017, which is supposed to act as an innovation hub that will help to reduce poverty globally. It includes the ability to use the blockchain and other technologies in various sectors as such as supply chain management, land administration, education, health, carbon market trading, and international payments.
The bond is part of the annually issued bonds by the World Bank each year, which go towards reducing poverty for member nations. Each year, the bank manages to get between $50-60 billion via bonds. To increase the digitization of its member nations’ economies, the World Bank will leverage on its innovativeness and experience. This way, they can accelerate progress towards achieving the Sustainable Development Goals.
Using the Blockchain in Finance
The Commonwealth Bank of Australia has been looking into the use of blockchain technology since 2016. It has created various pilot projects in the past to test how to use blockchain technology in the finance world. For instance, the CBA teamed up with the Australia and New Zealand Bank, Westpac, and IBM to try a blockchain-powered bank guarantee platform two months ago.
Various other entities are making a lot of progress when it comes to using the blockchain. A good example is the Spanish Bank BBVA, which has arranged various types of loans powered by the blockchain. These loans have gone to private companies and the government. Other firms have conducted various tests for issuance using the blockchain. Two of the most prominent examples are the National Bank of Canada and JP Morgan.
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