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World Bank Prices First Global Blockchain Bond, Raising A$110 Million

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The World Bank launched bond-i (blockchain operated new debt instrument), the world’s first bond to be created, allocated, transferred and managed through its life cycle using distributed ledger technology. The two-year bond raised A$110 million, marking the first time that investors have supported the World Bank’s development activities in a transaction that is fully managed using the blockchain technology.

The World Bank mandated Commonwealth Bank of Australia (CBA) as arranger for the bond on August 10. The announcement was followed by a two-week consultation period with the market, with key investors indicating strong support for the issuance.

Investors in the bond include CBA, First State Super, NSW Treasury Corporation, Northern Trust, QBE, SAFA, and Treasury Corporation of Victoria. CBA and the World Bank will continue to welcome investor interest in the bond throughout its life cycle, and enquiries from other market participants in relation to the platform.

The bond is part of a broader strategic focus of the World Bank to harness the potential of disruptive technologies for development. In June 2017, the World Bank launched a Blockchain Innovation Lab to understand the impact of blockchain and other disruptive technologies in areas such as land administration, supply chain management, health, education, cross-border payments, and carbon market trading.

Arunma Oteh, World Bank Treasurer, said: “I am delighted that this pioneer bond transaction using the distributed ledger technology, bond-i, was extremely well received by investors. We are particularly impressed with the breath of interest from official institutions, fund managers, government institutions, and banks. We were no doubt successful in moving from concept to reality because these high-quality investors understood the value of leveraging technology for innovation in capital markets.

Our painstaking work, over the last year, and in partnership with Commonwealth Bank of Australia, was equally instrumental to the success of the transaction. Commendation also to our other service providers, King & Wood Mallesons, Mark-it, Microsoft and Toronto Dominion Securities.

We welcome the huge interest that this transaction has generated from various stakeholders and will continue to seek ways to leverage emerging technologies to make capital markets more secure and efficient.”

The bond-i blockchain platform was built and developed by the CBA Blockchain Centre of Excellence, housed in the Sydney Innovation Lab. This project builds on the leadership and experience of CBA’s dedicated blockchain team, which has taken a lead role in applying blockchain technology to capital markets.

James Wall, Executive General Manager of IB&M International, CBA said: “Since announcing the mandate, the interest we’ve received for bond-i has been overwhelming. It is clear the market is ready and open to the uptake of emerging technologies and sees the potential evolution of the capital markets. It has been a pleasure to work on such a ground-breaking transaction with a forward-thinking organization like the World Bank.”

Foundation investors in bond-i contributed to the project through their feedback on the platform structure and functionality.

Derek Yung, Chief Operating Officer – Group Investments, QBE Insurance Group Limited, said: “QBE welcomes the opportunity to participate in the world’s first global blockchain bond issue. QBE seeks to collaborate with innovative partners, and CBA together with the World Bank, are leading the way for bond issuance with this ground breaking blockchain platform. We believe there is untapped potential for the application of this product to capital markets and are pleased to be involved as an early investor.”

William Whitford, Managing Director, Treasury Corporation of Victoria, said: “TCV were proud to play a part in the first global blockchain bond. The opportunity to be involved in innovation like this is a privilege, and both CBA and the World Bank Treasury team are to be congratulated in their leadership in this space.”

Service providers to the bond’s platform include TD Securities as market maker, IHS Markit as independent valuation provider, Microsoft as independent code reviewer, and King & Wood Mallesons as deal counsel.

The World Bank issues between US$50-US$60 billion annually in bonds for sustainable development. It has a 70-year track record of innovation in the capital markets. Among its pioneering issuances are the first bond in global format – a globally traded and settled bond issued in September 1989 – and the first e-bond, a fully integrated electronic bond issued in January 2000. As a frequent issuer in the Australian dollar market, it has since 1986 raised nearly A$60 billion from investors globally.

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Brazil and Argentina preparing new Latin American currency to ‘reduce reliance on US dollar’

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Image source: ndtv.com

The governments of Brazil and Argentina are making plans to create a new currency for Latin America, called the Sur (“south” in English), according to a report in the Financial Times.

Other countries in the region will be invited to use the currency.

Their goal is to “boost regional trade and reduce reliance on the US dollar”, the newspaper noted, citing government officials.

Argentina’s Economic Minister Sergio Massa told the Financial Times that the South American nations will soon “start studying the parameters needed for a common currency, which includes everything from fiscal issues to the size of the economy and the role of central banks”.

Brazil has the largest economy in Latin America, and Argentina has the third biggest (after Mexico).

Argentina-based Spanish economist Alfredo Serrano Manc, who directs a think tank dedicated to regional integration, the Latin American Strategic Center of Geopolitics (CELAG), told the Financial Times that “the path is to find mechanisms which substitute the dependence on the dollar”.

He added that now is the moment, given that “there are many governments that are ideologically similar”, with left-wing leaders across Latin America.

During his electoral campaign, Lula had floated the possibility of creating a regional currency for trade.

At a rally in May 2022, the Workers’ Party leader had said, “We are going to create a currency in Latin America, because we can’t keep depending on the dollar”.

Lula revealed that it would be called the Sur. He added that it would not be based on the euro model, and that countries could maintain their sovereign domestic currency. Instead, the plan would be to use the Sur for regional trade, Lula said.

After Lula won the October 2022 election, Ecuador’s left-wing politician and economist Andrés Arauz published a blueprint for a “new regional financial architecture” for Latin America.

Arauz said the plan would be to revive regional institutions like the Union of South American Nations (UNASUR) and the Banco del Sur (Bank of the South), and to create a Banco Central del Sur (Central Bank of the South) to oversee the new currency.

The goal is “to harmonize the payment systems of” the countries that make up UNASUR in order “to carry out inter-bank transfers to any bank inside of the region in real time and from a cellphone”, he wrote.

Today, Argentina is trapped in $44 billion of debt with the US-dominated International Monetary Fund (IMF). This dollar-denominated foreign debt has led to a constant drain of foreign currency out of Argentina, fueling high levels of inflation.

Argentina’s President Alberto Fernández visited China and Russia in February 2022, seeking alternatives to the US-dominated financial system, and joining Beijing’s Belt and Road Initiative.

Argentina has also applied to join the extended BRICS+ bloc, with Brazil, Russia, India, China, and South Africa. Buenos Aires attended the group’s 2022 summits at Beijing’s invitation.

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Burkina Faso: Former colony orders French troops to leave

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A soldier from Burkina Faso stands guard along the border with Mali and Niger during a military operation against terrorist suspects.(file photo) © Michele Cattani

Burkina Faso has demanded the withdrawal of French troops stationed on the territory of the West African nation, local media reported, citing a government decision. Relations between Paris and its former colony have been on a downward spiral for months now, with the local population blaming France for their security problems.

Agence d’Information du Burkina (AIB) reported that the government of Burkina Faso had suspended a 2018 agreement with France, which regulated the deployment of its service members in the country. Paris now has one month to remove its soldiers, the agency said.

France currently has 400 troops in the African country, who are stationed there as part of efforts to combat Islamist terrorist groups in the region.

In November 2022, French President Emmanuel Macron officially announced the end of anti-insurgent ‘Operation Barkhane’ in the Sahel region, which has been largely viewed as a failure. In doing so, France also vowed to “reduce the exposure and visibility of [its] military forces in Africa.”

The Sahel is a region in northern Africa that includes Senegal, Mauritania, Mali, Burkina Faso, and a number of other neighboring countries.

Paris ended another military mission in neighboring Mali last August after relations went sour, with the government calling France’s military involvement “not satisfactory.”

Hundreds of people protested in the Burkina Faso’ capital Ouagadougou against the French military presence, chanting anti-French slogans.

Mohamed Sinon, one of the main leaders of the collective that called the demonstration, said it was to show support for junta leader Traore and the security forces fighting jihadists. “We are a pan-African movement and we want cooperation between Burkina Faso and Russia, but also the strengthening of friendship and of cooperation with Guinea and Mali,” he added.

Protesters carried huge posters showing the presidents of Mali and Guinea — both of whom also came to power in coups — as well as Russian President Vladimir Putin.

A source close to the government clarified it was “not the severance of relations with France. The notification only concerns military cooperation agreements”.

Sources familiar with the matter told AFP that France’s preferred option would be to redeploy its forces in the south of neighbouring Niger, where nearly 2,000 French soldiers are already stationed.

French troops withdrew from Mali last year after a 2020 coup in the former French colony saw its rulers also inch closer to Russia.

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European farms mix things up to guard against food-supply shocks

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By ETHAN BILBY

‘Items in this section have limited availability due to supplier production issues,’ ‘Sorry, temporarily out of stock’ and ‘Sold out’ are all signs that became familiar as recent global upheavals exposed how precarious our food supply is.

The COVID-19 pandemic led to bare shelves in supermarkets as shipping routes were cut off. The war in Ukraine has affected the supply of essential grains.

But increased climate change stands to cause even greater disruption. Researchers say part of the solution to mitigating that risk is for farms to become more mixed through some combination of crop cultivation, livestock production and forestry, a move that would also make agriculture more sustainable. 

For Dr Sara Burbi, assistant professor at Coventry University in the UK until December 2022 and now an independent researcher, COVID-19 was a wake-up call.

‘Suddenly, we experienced first-hand what happens when value chains are not resilient to shocks and what happens when globalisation, with all its intricacies, does not work anymore,’ she said. ‘We saw highly specialised farming systems fail when they over-relied on external inputs that they had no access to.’

Climate change, according to Burbi, could provide even bigger global shocks ranging from widespread crop failures to lower yields or damage from flooding. More sustainable agriculture is essential to ensure food supplies can withstand the impact of climate change and unexpected local, national and even global crises.

Beneficial combos

During her tenure at Coventry University, Burbi coordinated the EU-funded AGROMIX project, which runs until end-October 2024.

As part of the project, pilot farms across Europe are experimenting with combining crop and livestock production in one farm (mixed farming) and with pairing farming and forestry activities (agroforestry). Poultry grazing in orchards is an example of a mixed-farming approach. The results reveal interesting synergies and promising effects, including improvements in soil health.

‘For a long time, forestry and agricultural activities have been considered at odds, as we have pushed for more and more specialised land uses,’ Burbi said. ‘This has led to loss of soil fertility and a sharp decline in biodiversity, coupled with an increased dependence on external inputs to compensate.’ 

A combined system can increase the cycling of nutrients needed in the soil for crops to grow. It can also help to regulate air and water quality, prevent land degradation and even provide biomass and food on-site for livestock.

One site in Switzerland, for instance, found that mixed farming helped keep soil quality high, while more specialised farming tended to deplete it.

AGROMIX will use 12 pilot sites and nine experimental ones, spread across three climatic zones (Atlantic, Continental and Mediterranean), to develop recommendations for farmers on combining productivity with greater sustainability and climate resilience.

Although mixed farming has been practiced for a long time, it is only recently that scientists have begun to measure biophysical data on such sites and provide real evidence to support approaches that work.

The project has found that the presence of trees on pasture has measurable benefits to animal health and welfare, especially in extreme heat when they provide a canopy of much-needed shade.

Trees and hedgerows can also offset greenhouse-gas emissions from livestock, increase the carbon sequestration capacity of the land, provide a haven for biodiversity and help prevent flooding.

The project wants to work closely with farmers, taking into account their needs and priorities.

‘Knowledge integration can empower key actors, in this case farmers, to embrace the transition to sustainable farming,’ Burbi said.

The next step will be designing agriculture systems that are totally energy independent and, as a result, even more sustainable.

Forest focus

The EU-funded MIXED project at Aarhus University in Denmark is also focused on combining mixed farming systems with agroforestry to make agriculture more efficient and resilient.

‘It’s not only about economic efficiency, but also environmental and climate efficiency,’ said Professor Tommy Dalgaard, the project coordinator. ‘Agriculture needs to be resilient to change, all kinds of change.’

Working with around 100 farmers across Europe, MIXED has created networks to study the different ways in which mixed farming and agroforestry can be used.

One focus is on the take-aways that can be gleaned from the traditional agroforestry techniques used in the Tagus Valley of Portugal, in an area known as the Montado.

‘They have these big cork oaks that are often more than 100 years old with grazing cattle below them,’ said Dalgaard. ‘In the winter, they can plough the soil and make small fields with cereal so they can harvest a winter crop and then in the dry season the cattle can be there.’

It is possible to have these green, vegetated areas because of the ancient oak trees, which create shade and sustain the water cycle.

The concern is that drought may threaten the oaks, so researchers from the project are trying to work out how best to preserve the system as well as how to adapt it to new areas.

Danish farms in the project have taken a different approach, looking at how farmers can use coppicing to create a carbon sink. Coppicing is a pruning technique that cuts trees to ground level, causing new shoots to grow rapidly from the base to form a bush.

These are then usually harvested every 10-20 years for biomass fuel, meanwhile also giving shelter and shadow to free-range, high-value livestock such as sows with piglets. Cutting the bushes to create mulch also helps to improve soil quality and avoids burning them, according to Dalgaard.

The project’s ultimate aim is to build up a European database demonstrating examples of mixed farming and agroforestry, highlighting the benefits and advising on best practices. Essentially, it is about inspiring more farmers to adopt mixed farming and agroforestry methods and supporting them in the process.

‘We need real-life examples,’ said Dalgaard. ‘We now have some concrete examples of farmers, agricultural landscapes and value chains that can report good results from having done something in a different way.’

Research in this article was funded by the EU. This article was originally published in Horizon, the EU Research and Innovation Magazine.

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