Germany Central Bank Completes Blockchain Trial
In the latest blockchain news, the central bank of Germany, Deutsche Bundesbank, and securities marketplace organizer Deutsche Boerse (DB) have managed to successfully complete the trial of a blockchain solution in the settlements area. According to official reports, the trial of blockchain based settlement technology research, which is called Blockbaster, started in 2016.
Bond Issuance Lifecyle
The main point of the joint research was to conduct on blockchain the full lifecycle of bond issuance, settlement, corporate actions, and redemption. This should also include cash transfer, as well as the provisioning of digital coins, transfer between market participants, and settlement of cash payments.
The transaction volume and speed of a production system were tested on the Hyperledger Fabric framework and Digital Asset. The latter is basically a distributed ledger (DLT) solution for the financial sector. The authors of the report also stressed that the basic technologies behind the experiment were constantly improved during the trial, which rendered some test results outdated.
Advantages and Disadvantages
The report outlined key advantages and disadvantages of blockchain technology. The high latency for some technology stacks and high CPU-usage were mentioned among weaknesses, while higher resiliency and lower cost of reconciliation due to the joint database were considered to be benefits.
Following the trial, the central bank and DB came to a conclusion that decentralized solutions should be adapted to fit the financial markets’ needs. They also noticed that providers of blockchain or DLT-based solutions improved their offers and increasingly developed specialized software to serve particular use cases, customizing blockchain for particular demands.
As cited in a recent press release, executive board member of Germany’s central bank Burkhard Balz said that the Blockbaster trial was a success, noting he expects the “rapid development to continue” and adding that he sees “potential in using it for high-volume applications.”
The press release further stated: “The approach of a permissioned architecture, which takes into account the requirements of the financial sector from the outset, has proven to be right.”
As previously reported, the U.K. startup Setl has recently gained French securities regulator’s approval. This basically now allows it to run a blockchain-powered central securities depository. This means Setl could in the nearest future connect to the Target2-Securities platform — a €1 billion pan-European network for securities settlement run by the European central bank with the aim to increase the speed of cross-border payments.