Australia's biggest bank is set to deliver the world's first blockchain bond, in partnership with the World Bank.
Commonwealth Bank (CBA) will deliver the first bond in the world to be created, allocated, transferred and managed using blockchain technology.
The World Bank awarded CBA a mandate to develop the Australian-dollar Kangaroo bond - termed "bond-i" - with input from Northern Trust, QBE, and Treasury Corporation of Victoria. CBA said the bond would be issued and distributed on a blockchain platform operated by the World Bank and CBA in Washington and Sydney, respectively. The platform was designed and developed by the CBA innovation lab's blockchain centre of excellence.
CBA international executive general manager of institutional banking and markets James Wall said the bank took a collaborative approach to innovation, having partnered with other financial institutions and government bodies to innovate with the elusive ledger technology.
"We believe that this transaction will be groundbreaking as a demonstration of how blockchain technology can act as a facilitating platform for different participants," Wall said.
"We are delighted to have partnered with the World Bank and fully support its vision of making innovative use of technology such as blockchain to increase the efficiency of financing solutions to better achieve their goal to end extreme poverty."
CBA said blockchain had the potential to streamline processes for raising capital and trading securities, adding the technology could improve operational efficiencies and enhance regulatory oversight.
World Bank treasurer Arunma Oteh thanked investors for partnering with the World Bank and CBA in the world first initiative.
"Our goal is to continue to harness innovation for the benefit of markets and our mission of ending poverty and boosting shared prosperity," Oteh said.
"Our sincere appreciation to our pioneer blockchain bond investors, who are partnering with us on this transaction because of our common desire to strengthen markets, improve efficiency and transparency, and enable more robust issuance processes."
CBA said it would employ a private Ethereum blockchain for the project, citing the active development community Ethereum enjoys worldwide, and the suitability of its functionality to the project. The bank said however it would remain open to using other blockchain technologies in the future as they developed.