Commonwealth Bank and Queensland Treasury Corporation create world’s first blockchain-based government bond
QTC goes blockchain
Commonwealth Bank of Australia (CBA) has issued a cryptobond for Queensland Treasury Corporation (QTC) using its capital markets blockchain platform.
CBA says it is “the first blockchain bond issuance by a government entity both in Australia and in the world”.
This is the first trial of CBA’s private, permissioned blockchain platform for the end-to-end issuance of bonds.
“Our proof-of-concept demonstrates blockchain is capable of delivering efficiency to issuers, investors and other market participants,” states George Confos, executive general manager of business and corporate finance at CBA.
QTC used the blockchain to generate a bond tender, view investor bids in real-time, finalise investment allocation and settle instantly with investors. QTC acted in both the issuer and investor role to test the end-to-end process for the issuance.
The bond was created in digital form using smart contract technology, and has the ability to automatically pay coupons to the current holder when due.
Grant Bush, deputy CEO and MD, funding and markets at QTC, comments that the treasury is “looking at the long-term implications of the technology”.
CBA emphasises, however, that this bond is a working prototype, is not tradable and does not carry any debt obligation.
The bank’s blockchain team developed the prototype in the Innovation Lab, together with the institutional banking and markets’ debt markets team and its clients.
