In a world first, the Commonwealth Bank of Australia has successfully developed a blockchain for government bonds
On the backdrop of intense blockchain activity across the global banking industry, the Commonwealth Bank of Australia has built and tested the world’s first blockchain for government bonds this week.
The blockchain was trialed by the Queensland Treasury Corporation for the issuance of semi-government bonds. A Commonwealth Bank media release stated that the Queensland Treasury Corporation (QTC) successfully used the custom blockchain for government bonds to generate a tender, view investor bids in real time, finalize investment allocation and make instant settlements with investors. A dedicated team in the Commonwealth Bank’s Innovation Lab developed the QTC bond using smart contract technology.
George Confos, Executive General Manager of Business & Corporate Finance at Commonwealth Bank, said, “Our proof-of-concept demonstrates blockchain is capable of delivering efficiency to issuers, investors and other market participants. Blockchain makes it possible to increase efficiency and transparency, which will redefine how capital markets operate.”
Although regulatory approval is still required, the trial marks a significant achievement for the Commonwealth Bank, which is widely respected as a global leader in banking innovation.
Head of Blockchain at Commonwealth Bank, Sophie Gilder, said, “We are delighted QTC and our other government treasury partners are participating in the project. Building the capital markets platform and collaborating with forward thinking partners has accelerated our understanding of blockchain in the real world. 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.”
Deputy CEO and Managing Director of Funding and Markets at QTC, Grant Bush, said, “QTC is collaborating with CBA to experience the technology first hand through a working bond prototype. For QTC, we are looking at the long-term implications of the technology as a semi-government issuer. The collaboration with CBA and other stakeholders involved is proving to be extremely useful as we can understand and think through applications along the way based on the prototype.”
According to the Australian Financial Review, a number of other state governments are also currently examining the use of a blockchain for government bonds.