The World bank has for the second time in a year used Blockchain technology to issue a bond raising $33m taking the total amount raised using this method to over $100 million so far. Last year the World Bank in conjunction with Commonwealth Bank of Australia (CA), Royal bank of Canada and TD Securities raised $80 million.
Sophie Gilder, head of Blockchain and Artificial Intelligence at CBA, was reported as saying: “CBA now has tangible evidence … that blockchain technology can deliver a new level of efficiency, transparency, and risk management capability versus the existing market infrastructure.Next we intend to deliver additional functionality to deliver greater efficiencies in settlement, custody and regulatory compliance.”
The World Bank issues $50 billion to $60 billion p.a. so if we assume that it costs 0.5% to issue a bond and if the expenses to issue a bond can be reduced by just 20% this would equate to the World Bank potentially saving $5 to $6 million a year!
The total value of bonds just in the USA is $40 trillion and if you assumed that just 10% i.e. $4 trillion a year matures and gets re-issued and the one can save 20% of the 0.5% cost this equates to an annual potential saving just in the USA of $400 million a year!
According to Thompson Reuters in 2018 there was over $6.6 trillion of debt issued globally in 2018 and 25 banks accounted for 55% of the issuance!
Little wonder why there is more and more interest in using Blockchain technology to cut out layers of costs and intermediaries not to mention the greater transparency and risk controls that can be implemented!
90 second audio version- https://www.linkedin.com/posts/jonnyfry_digitalbytes-blockchain-activity-6570220068850974720-sqHx