German Central Bank And Stock Exchange Successfully Complete Blockchain-Based Settlement Experiment

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Germany’s central bank and the country’s leading stock exchange operator have announced that they have successfully completed a trial to improve back-office-services, which are currently inneficient and costly for financial institutions.

The trial was done using the Hyperledger Fabric as well as the Digital Asset Platform and was deemed a success. The joint press releases explained:

We expect the rapid development to continue, and also see the potential in using it for high-volume applications.

The two bodies already collaborate in financial market infrastructure development

In a joint announcement on Thursday, October 25, the German central bank (Deutsche Bundesbank) and the Deutsche Börse announced that they have successfully finished a prototype of blockchain solutions designed for the settlement of various financial products.

The two bodies who have been collaborating in developing the financial market infrastructure in the country partnered on the Blockbaster project back in March 2016.

Project BLOCKBASTER

The primary aim of the project was to research the different ways the blockchain technology could be useful in improving back-office services for both the central bank and the stock exchange operator.

The goal of the joint project was to test a distributed ledger-based solution that would simplify the currently complex procedures of settling transactions between the entities.

After more than two years, the partners have announced that the trial was successfully completed and that it will serve as the basis to move the trial into the next stage.

The trials were based used to settle numerous transactions such as securities, payments, payment of interests, and also repayments for bonds coming to maturity.

According to the press release, the tests conducted revealed that the two prototypes are appropriate for operations that are productive within the infrastructure of the financial markets. They could also serve as reference points for further developments.

The two bodies added that they decided to test two technology stacks under certain market conditions. The two blockchain protocols were developed on Hyperledger Fabric (version 1.0) and Digital Asset (DA) platform.

The two bodies in their press release further added that each of them has released test prototypes prior to the final release, and they could be used to further improve the securities settlement.

Prototype trial a massive boost for both bodies

While commenting on this latest development, Burkhard Balz, who is a member of the Executive Board of Deutsche Bundesbank stated that he believes there is a lot of potentials when using blockchain technology, especially for transactions involving high volume.

He expects further development in this area while adding that the method of seasoned architecture which also considers requirements of the stock and financial markets has turned out to be correct.

Berthold Kracke, who is the head of Clearstream Global Operations at Deutsche Börse Group meanwhile praised Digital Asset for ensuring that the product is desired to fit the needs of the securities industry.

He added that the test is an indication that the blockchain technology is an appropriate application to use in the area of securities settlement and other infrastructures of the financial market.

According to the final reports by Blockbaster, the project was embarked upon solely for research purpose with no intention to produce an operational system from the project.

This shows that the findings from the pilot has surprised the two bodies and is an indication that the technology could have used in several other industries.

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