Commonwealth Bank of Australia is claiming a world-first today, announcing it has issued the first-ever government bond using blockchain.
The bank announced its capital markets blockchain platform was used to arrange what it calls “a virtual cryptobond” for Queensland Treasury Corporation.
“Queensland Treasury Corporation successfully used the blockchain to generate a bond tender, view investor bids in real time, finalise investment allocation and settle instantly with investors,” announced CBA.
QTC was both the issuer and investor in producing the working prototype bond that is not tradable or carrying any debt.
George Confos, CBA’s business & corporate finance executive general manager, said the technology will redefine how capital markets operate.
“Our proof-of-concept demonstrates blockchain is capable of delivering efficiency to issuers, investors and other market participants,” he said.
The use of blockchain technology, which is a real-time distributed ledger, simplifies the settlement process for bond issues by unifying the payment and registration into one transaction.
QTC is keeping a close eye on the “long-term implications” of blockchain, said deputy executive Grant Bush, and the CBA trial had been useful for building on the bond issuer’s understanding of the technology.
CBA head of blockchain Sophie Gilder said collaborating with third parties in trials accelerates the technology’s development.
“Our long-term view is blockchain technologies will significantly alter capital markets dynamics, changing the way participants interact, with increased efficiency having positive impacts on risk, cost and transparency,” she said.